Terra Energy ceases operations; directors and officers resign

Terra Energy Corp. (TSX: TT) has shuttered all of its wells and facilities in Alberta and British Columbia, Canada, and has now terminated certain officers of the company and all of its remaining non-executive employees. Terra has notified its lender, Canadian Western Bank (CWB), and both the Alberta Energy Regulator and the British Columbia Oil and Gas Commission, of the shutting-in by Terra of its operated/licensed wells and facilities in both Alberta and British Columbia and that Terra no longer has the financial capability to carry on its operations.

The directors have determined that Terra's business is no longer viable. The company's realizable asset value is less than its current debt, and, in the present economic environment and in Terra's present circumstances with its current asset base, the company cannot refinance or recapitalize its operations. Terra no longer has the financial capability to carry on its operations, and it can no longer conduct any further business. As result, Terra announces that the directors and officers of Terra have resigned.

On March 18, the company announced  that CWB has made a demand on Terra, as debtor, and each of its guarantors for payment in full of Terra's outstanding indebtedness plus accrued interest, costs, and fees, and that CWB provided Terra and each of its guarantors with a notice of intention to enforce security under Section 244(2) of the Bankruptcy and Insolvency Act (Canada). Terra and each of its guarantors have consented to the enforcement by CWB, as secured lender to Terra of CWB's security pursuant to Section 244(2) of the Bankruptcy and Insolvency Act (Canada).

The cost of operations, including processing and transportation of commodities, field labor, and production costs, royalties, and administrative expenses, exceed gross revenues at current commodity pricing levels. The company's lender has declined to provide further financial support to Terra and there is no other means of financing available to the company at this time. As such, Terra no longer has the financial capability to carry on its operations.

Terra has been actively engaged, with financial advisors, in an asset sales and restructuring process since September 2015 to monetize any or all assets and shares of the company and to reorganize and restructure the company. Since commencement of the asset sales and restructuring process began, proceeds from completed transactions of $12 million have been utilized to reduce the company's indebtedness but the asset sales process has been insufficient to satisfy all the liabilities of the company. Terra's asset sales process has also been hampered in Alberta due to the company having a LMR rating below one. Terra’s attempts to reorganize or restructure the company have also been unsuccessful.



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