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Terrace Touts 'Outstanding' Success of STS Olmos Project; Well Results

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   |    Wednesday,October 02,2013

Terrace Energy Corp. has reported continuing success in its horizontal drilling program on its STS Olmos Project in South Texas, USA with its partner, BlackBrush Oil & Gas LP.

Its latest horizontal well, the STS AW A1-17H well, was drilled to a measured depth of 14,215 feet, including a horizontal section of approximately 4,300 feet in the target interval and was successfully fracture stimulated in 18 stages.

After less than 5% load recovery, the well is stabilizing at a rate of approximately 627 BOPD (barrels of oil per day) and 2.6 MMCFD (million cubic feet per day) of liquid rich gas. All of the wells in this project will be tied into the wet gas gathering system located on the STS Project and delivered into a high efficiency natural gas liquids extraction plant. Based on the current test rate, liquids recoverable through the extraction plant are expected to effectively increase this well's revenue stream to over 1200 BOEPD* (barrels of oil equivalent per day). There can be no assurance that the flow rate will stabilize at current or higher levels over time.

This well is the sixth successful completion in the Company's STS project and is testing at rates consistent with the previously announced completions. The most recent well, the SP5 1-16H, announced in September has accumulated over 27,000 BOE* in its first 30 days of production. Terrace holds a 33.33% working interest and a 25.00% net revenue interest in the SP5 1-16H.

Drilling operations have successfully concluded on the final well of the 2013 program, the SP5 AW A1-27H. Fracing and completion operations are scheduled to begin early this month. Based on the success of the 2013 delineation program, the Company and its partner are currently formulating plans for an aggressive development plan to begin in early 2014.

Terrace holds a 16.67% working interest and a 12.50% net revenue interest in the STS AW A1-17H and a 37.20% working interest and a 27.90% net revenue interest in the SP5 AW A1-27H.

As previously reported, Terrace purchased an average 26.88% working interest and a 20.16% net revenue interest in approximately 14,400 gross acres (3,875 net acres) in the STS Project. The project acreage has the potential to support approximately 60 offset drilling locations.

Dave Gibbs, the Company's President, commented: "This latest well continues to demonstrate the consistency and repeatability of the STS Project's productive capabilities. The 2013 drilling program continues to produce outstanding success in defining the long-term reserve potential for this project."