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2014 news releases

Terrace Secures A US$75 Million Credit Facility For Its STS Olmos Development Drilling Program

Vancouver, BC June 9, 2014 – Terrace Energy Corp. (the “Company” or “Terrace”) (TSXV: TZR, OTCQX: TCRRF; Germany: 2TR) is pleased to announce that its wholly owned subsidiary, Terrace STS, LLC, has secured a US$75 million senior unsecured term credit facility (the “Term Credit Facility”), which is non-recourse to Terrace, to fund the development of its STS Olmos Project in McMullen and LaSalle Counties in south Texas.  The facility is arranged and provided by Chambers Energy Capital (“Chambers”) of Houston, Texas.

Dave Gibbs, the Company’s President and CEO commented: “We are extremely pleased to work with Chambers, a highly respected capital provider to the oil and gas industry in the United States. This facility will allow us to accelerate our development plans to drill and complete approximately 55 gross wells over the next 30 months. The cash flow we expect to generate will be the catalyst for the Company’s transformation from a pure exploration company to a robust oil producer.”

Dave Gibbs further commented: “This Credit Facility will also allow us to use the majority of our available equity capital to expedite high potential exploratory programs on our Maverick County and Big Wells Projects, particularly those targeting the naturally fractured Buda Limestone.”

Rivington Holdings, LLC acted as exclusive financial advisor to Terrace Energy Corp.

About the STS Olmos Project

As previously reported, the Company and its development partner have drilled nine successful wells on STS Olmos, which comprises approximately 17,000 gross acres in McMullen and LaSalle Counties in south Texas. These wells established the viability of the project with initial 30 day production rates approximating 1,000 BOEPD (83% liquids). With the results of these successful delineation wells, the Company was able to identify approximately 145 additional drilling locations within our current leasehold. We are finalizing field preparation work to launch an aggressive drilling program in July, using pad drilling techniques that allow for the drilling of multiple wells from a single location which will significantly improve capital efficiency and accelerate development of the project.

The Term Credit Facility

The Term Credit Facility contains the following terms and conditions and such other terms and conditions that are customary for such facilities including requiring compliance with customary financial and reserve ratios and other covenants:

Borrower: Terrace STS, LLC.
Amount: US$75 million, of which US$50 million will be available initially and the balance with the approval of Chambers.
Term: Four years.
Interest: Cash interest of LIBOR + 7% per annum plus payment-in-kind interest ("PIK Interest") of 5% per annum.
Payments: Cash interest paid monthly.  Principal and PIK Interest paid upon maturity.
Prepayment: Permitted.  If prepaid in first three years with a "make whole premium" for interest plus 4%.  After third anniversary, pre-payable without penalty or premium.
Condition: The consent of the mineral interest lessors to the transfer and registration of certain leasehold working interests between the Company and its partner, as reported on November 26, 2013.  

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 with a particular focus on South Texas.

“Dave Gibbs”
Dave Gibbs, President and Chief Executive Officer


Cautionary Statements regarding use of BOEs, Initial Production Rates and Forward-Looking Information

BOEs/boes, as used in the disclosure of BOEPD in this news release, may be misleading, particularly if used in isolation.  A boe conversion ratio of six (6) Mcf to one (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.  As the value ratio between natural gas and crude oil based on the current prices of natural gas and crude oil is significantly different from the energy equivalency of 6:1, utilizing a conversion on a 6:1 basis may be misleading as an indication of value.

Average 30-day initial production rates disclosed in this news release are not necessarily indicative of long-term performance or of ultimate recovery.

This press release includes forward-looking information and forward-looking statements (together, “forward-looking information”) within the meaning of applicable Canadian and United States securities laws. Forward-looking information includes: the Company's plans for further development of the STS Olmos project (hereafter, the "Project"), including its plans to drill and complete approximately 55 gross wells over the next 30 months; field production objectives for the Project; expectations regarding the potential number of additional drilling locations on the Project; performance characteristics of the Project; and expectations regarding the use of multiple well drilling pads on the Project; and the Company’s plans for exploratory activities on its Big Wells and Maverick County Projects. Users of forward-looking information are cautioned that actual results may vary from the forward-looking information disclosed in this press release. The material risk factors that could cause actual results to differ materially from the forward-looking information contained in this press release include: uncertainties associated with estimating oil and natural gas reserves; the risk that unexpected geological results are encountered, completion techniques require further optimization or production rates do not match the Company's assumptions; changes to the Company’s ability to access infrastructure in the vicinity of the Project at a reasonable price; changes to the Company’s ability to access materials, equipment and services at a reasonable price; the impact of general economic conditions; volatility in market prices for oil and natural gas; currency fluctuations; risks and uncertainties associated with potential changes in environmental or other regulations, permitting processes or taxation; the risk that the Company is unable to access required equity financing; and other risks and uncertainties described under the heading "Risk Factors" and elsewhere in the Company's most recent Annual Information Form and other documents filed with Canadian securities regulators at www.sedar.com.

Readers are cautioned that the assumptions used in the preparation of forward-looking information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking information. The material assumptions used to develop the forward-looking information include: production from the wells at the Project will continue as projected and modelled; reserve recoveries are consistent with management's expectations; the Company will be able to access infrastructure in the vicinity of the Project on reasonable terms; the Company will be able to access the goods and services necessary in order to conduct further exploration, development and production at the Project on reasonable terms; regulatory requirements will not change in any material respect; oil and gas prices will remain in their current range; capital markets will continue to be receptive to financing the Company; and that other aspects of the Company’s operations will not be affected by unforeseen events. Statements regarding future drilling locations are based on geologic interpretations which are subject to revision as further data is developed.

The Company does not assume the obligation to update any forward-looking information, except as required by applicable law.

For further information please contact:  terrace@terraceenergy.net

Canadian Address
Suite 1012 - 1030 West Georgia St.
Vancouver B.C. V6E 2Y3
Ph: 604 282-7897 ext. 1004
Fax: 604 629-0418
US Address
Suite 400-202 Travis Street,
Houston Texas 77002
Ph: 713 227-0010