a cash flowing, by design - Terrace Energyterraceenergy.net/_resources/presentations/terrace...Corporate Overview • Proven Track Record of Securing and Exploiting Low Entry Cost

Corporate Overview2013

Focused team building a cash flowing, growth oriented oil company by design

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TSXV: TZR; OTCQX: TCRRF

Corporate Overview

• Proven Track Record of Securing and Exploiting Low Entry Cost Opportunities with Significant Upside Potential

• Growth oriented strategy focused on unconventional oil plays in onshore USA• Multiple objectives with long life reserves and repeatable drilling locations

• Core Projects in South Texas• Olmos Tight Sandstone Development• Eagle Ford Shale Development• 50 MMBOE gross / 10 MMBOE net*• 136 gross drilling locations (33 net locations)*• Additional opportunities in multiple horizons on existing acreage

• Growth Opportunities in Mid‐Continent Resource Plays• Mississippi Lime Project in Western Kansas• Pennsylvanian Multi‐Horizon Horizontal Development Project in Panhandle

* Management internal estimates based on industry‐averaged models . (See disclaimer)

2www.terraceenergy.net TSXV: TZR; OTCQX: TCRRF

Key Operations Management

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Dave Gibbs ‐ PresidentMr. Gibbs received a Bachelor of Engineering degree from Georgia Tech in 1975 and has 37 years experience in the oil & gas exploration anddevelopment business. Mr. Gibbs began his career with Exxon Corporation in 1975 and subsequently held senior management positions of severalsuccessful independent oil companies (both public and private) including The Superior Oil Co, Union Texas Petroleum and Nerco, gaining experience inevery major producing basin in the US, as well as several international assignments. In 1992, Mr. Gibbs launched TDC Energy, a highly successful privatecompany which was merged into a public vehicle in 2005.

Bill McMoran – GeologistMr. McMoran has 44 years experience with Texaco and several small and mid‐sized companies. As Exploration Manager of Pelto Oil Company,Mr. McMoran directed efforts in finding and developing 120 BCFE. Working both Exploration and Business Development, Mr. McMoran led explorationefforts that discovered over 60 MMBOE and contributed to the enormous growth of Whittier Energy from a start‐up company to a sale valuation of $188MM.

Dan Morris – GeophysicistMr. Morris has 29 years of domestic and international experience in exploration, seismic acquisition, processing and interpretation. Mr. Morrispossesses an in‐depth understanding of oil an gas deals, asset acquisition and strategic advantage of technology. Mr. Morris’ exploration experienceincludes Texas and Louisiana, with international experience in China, Nigeria, Argentina, Indonesia, Malaysia, Egypt and England. Mr. Morris hasextensive technical knowledge of seismic data acquisition, data processing, interpretation and prospect generation using Landmark and SMTworkstations. Mr. Morris has generated prospects resulting in over 25 MMBOE.

www.terraceenergy.net TSXV: TZR; OTCQX: TCRRF

Key Corporate Management

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Dan Carriere ‐ ChairmanMr. Carriere was a founding partner and significant shareholder, as well as the Senior Vice President, of Corriente Resources Inc. (TSX) from 1992until the sale of Corriente to CRCC‐Tongguan Investment (Canada) Co., Ltd. (owned jointly by Tongling Nonferrous Metals Group Holdings Co., Ltd.and China Railway Construction Corporation Limited) for approximately $678 million in mid‐2010. During the past 20 years, Mr. Carriere has beeninstrumental in the development and financing of small to medium capitalized companies, both private and public, in Canada and the USA. Mr.Carriere was also a Director and significant shareholder of ID Biomedical Corporation since the Company's initial public offering in 1991. IDBiomedical grew from an initial $3 million market capitalization to $1.7 billion at the time of its takeover offer from Glaxo Smith Kline plc in 2005.

Eric Boehnke ‐ CEOMr. Boehnke has been the President and a Director of Big Sky Management Ltd., a private company principally involved with providing corporatefinance services to private and public companies. Mr. Boehnke has been an officer and director of a number of public companies, including PetraPetroleum (TSXV: PTL), a company focused on finding and developing international oil and gas opportunities.

WilliamMcCartney ‐ DirectorMr. McCartney received a Bachelor of Arts from Simon Fraser University in 1978 and has been a member of the Institute of Chartered Accountantsof British Columbia since 1980. Since 1990, Mr. McCartney has been the President of Pemcorp Management Inc., a private company whichprovides corporate finance and administrative management services to private and public companies. He is a former founding partner of Davidson& Company, Chartered Accountants (1984‐1990), where he specialized in mergers & acquisitions, corporate tax planning and capitalstructuring. He is a currently a member of the local (policy) advisory committee to the Toronto Stock Exchange and TSX Venture Exchange. He is apresent or past director of: Mercer International Inc., Sunward Resources Corp., Newstrike Capital Inc., Exeter Resource Corp. and Dynasty Metals& Mining Inc., among others.

Ken Shannon‐ DirectorMr. Shannon received a B.Sc. and M.Sc. in Geology at the University of B.C. and has been involved in the junior resource sector for over thirtyyears. He has participated in the grass roots discovery of over 30 Billion pounds of copper in Argentina and Ecuador as well as managing work onfeasibility and pre‐feasibility studies for various commodities in Bolivia, Ecuador and British Columbia. As CEO of Corriente Resources and othercompanies he has helped to raise over $200 Million of venture capital for mining exploration and development. In 2010, Corriente was sold toCRCC‐Tongguan Investment (Canada) Co., Ltd. (owned jointly by Tongling Nonferrous Metals Group Holdings Co., Ltd. and China RailwayConstruction Corporation Limited) for approximately $678 million. www.terraceenergy.net

TSXV: TZR; OTCQX: TCRRF

Terrace Energy- Project Location Map


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Terrace STS Olmos Development Project

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Terrace STS Acreage14417 Gross Acres / 3875 Net Acres

Oil Window

Gas Window

A.W.P. (Olmos) FieldOil: 44 MMBO Gas: 420 BCF

Location: LaSalle and McMullen Counties, TexasTarget Formation: Olmos SandAcreage Position: 14,417 acres gross / 3875 acres netLand Acquisition Cost: $258 per acreDepth: +/‐ 8,950 feetOlmos Thickness: +/‐ 330 feetReserve Potential*: 23 MMBOE gross (5MMBOE Net)New Drill Locations: 72 Gross (19 Net)Typical Well Parameters:

Well Cost: $7.0 millionDrill time: 19 daysLateral length: 4200’Frac Stages: 14Spacing: 1000’ LateralInitial Production Rate: 1100 BOEPD Estimated Ultimate Recovery: 300 MBOE

STS 1‐667H

47H#2

47H#1


*Management internal estimates based on industry‐averaged models . (See disclaimer)

Terrace STS Olmos 2012 Drilling Program Results

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Existing Olmos Horizontal Wells (3)Future Potential Locations (72)

1‐667

47#1

47#2

IP: 1523 BOEPD

IP: 1373 BOEPD

IP: 1068 BOEPD


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Terrace STS Olmos Development Plan

Existing Olmos Horizontal Wells (3)2013 Planned Olmos Horizontal Wells (8)Future Potential Locations (64)

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2

3

4

5

6

7

8

1‐667

47#1

47#2


Terrace STS Olmos Project Wellbore Economics

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• Effective Wellhead Prices (10/31/12):• Oil ‐ $95.46 / Bbl• (+/‐ $5.00 premium to WTI due to location and

quality)• Gas ‐ $3.34 / Mcf• NGL ‐ $0.80 / gallon

• Product Mix:• Oil ‐ 41%• NGL ‐ 25%• Gas ‐ 35%

• Effective Realized Price: $54.55 / BOE• Direct Operating Expense: $8.77 / BOE

• LOE ‐ $2.08• Transportation ‐ $2.92• Ins. & Taxes ‐ $3.77

• Cash Margin: $45.78 / BOE (84%)


Terrace STS Olmos Project Value Creation

• Initial Capital Investment– Land Acquisition $1.0 million– Exploratory Drilling $6.6 million

• Current Results– Net Production 435 BOEPD

• Project Potential– Net Resource Potential* 5 MMBOE– Drilling Locations (Gross / Net) 72 / 19

*Third party engineering resource assessment. (See disclaimer)


Terrace Cutlass Eagle Ford Project Location Map


Cutlass Project

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Location: Dimmitt and LaSalle Counties, TexasTarget Formation: Eagle Ford ShaleAcreage Position: 3395 acres gross / 1018 acres netAcreage Cost: $1,859 per acre

$1,083 cash$776 capital contribution

Shale Thickness: +/‐ 175 feetReserve Potential*: 24 MMBOEPotential Drilling Locations: 46

Typical Well Parameters:Well Cost: $7.5 millionDrill time: 21 daysLateral length: 4500’Frac Stages: 12 ‐ 16Spacing: 80 acres per locationInitial Production Rate: 900 BOEPDEstimated Ultimate Recovery: 453 MBOE


*Management internal estimates based on industry‐averaged models. (See disclaimer)

Terrace Cutlass Project Value Creation

• Initial Capital Investment– Land Acquisition $1.1 million– Delineation Drilling $4.4 million

• Current Results– Two wells drilled, logged and cored through entire Cretaceous Section

• Over 100 feet of net pay in Lower Eagle Ford Shale• Highly prospective potential indicated in Buda Limestone and Lower Austin Chalk

• Project Potential– Net Resource Potential 5.5 MMBOE*– Drilling Locations (Gross / Net) 46 / 14

*Third party engineering resource assessment. (See disclaimer)


Progress To Date – Value Creation

• Capital Deployed– $13.1 Million

• Resource Potential Delineated*– 47 MMBOE Gross / 10.5 MMBOE Net

• Drilling Locations Identified– 118 Gross / 33 Net


*Management internal estimates based on industry‐averaged models. (See disclaimer)

Growth PotentialExploit Existing Acreage Position• Improved Technology / Downspacing

Planning new “Gas‐Frac” process at STS project for Q1 2013

• Explore Additional HorizonsSTS Project

Shallow Wilcox potential, Deep Sligo / Hosston potentialCutlass Project

Austin Chalk, Buda Limestone, Edwards Limestone

• Acquire Offset AcreageMultiple negotiations in progress offsetting STS ProjectReviewing numerous blocks in South Texas Cretaceous Trend

New Growth Areas• Western Kansas Mississippi Lime Play

15,000 acres under option in Finney County, Kansas (Redhawk Project)

• Texas / Oklahoma Panhandle Marmaton Horizontal PlayJoint Venture being negotiated in Perryton TX 17,000 acres under review


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SAN ANTONIOHOUSTON

PERRYTON

REDHAWK

AMARILLO

STS OLMOSCUTLASS EAGLE FORD

KANSAS

OKLAHOMA

TEXAS

Mid-Continent Expansion Projects


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Why Mid-Continent Horizontal Plays?

Low drilling costs +/‐ $3.5 million/well

Mostly oil and liquids production

Average IP rates of 300 BOEPD

Individual rates over 1000 BOEPD

~ 17,000 vertical Mississippian data points

~ 500 horizontal well data points currently

IRRs ~ 100%


Western Kansas Mississippi Lime Trend

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Redhawk Project Location


Capital Structure

• Share Structure:• Issued and Outstanding: 63,069,321• Fully Diluted: 73,081,821• Management/Directors/Affiliates: 64%

• Cash on Hand: $1.8 MM*• Accrued Revenue from STS Project: $700,000**• Debt: Nil

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* Approximate** Due 2/25/13


Contacts

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[email protected]

canadian addressSuite 270 ‐ 666 Burrard St.

Vancouver B.C.V6C 2X8

p 604 687 0888 f 604 687 0885

us addressSuite 407 ‐ 202 Travis St.

Houston, TX77002

P 713 227 0010


CAUTIONARY STATEMENT REGARDING FORWARD LOOKING STATEMENTS

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This presentation and the material contained herein are confidential and are for information purposes only and may not be reproduced or distributed to any other person orpublished, in whole or part, for any purpose whatsoever. This presentation and the material contained herein do not constitute a general advertisement or general solicitation oran offer to sell or a solicitation to buy any securities in any jurisdiction. Such an offer can only be made by prospectus or other authorized offering document. This presentationand materials or fact of their distribution or communication shall not form the basis of, or be relied on in connection with, any contract, commitment or investment decisionwhatsoever in relation thereto. The information in this presentation is not intended in any way to qualify, modify or supplement any prospectus or other information disclosedunder the corporate and securities legislation of any jurisdiction relating to Terrace Energy Corp. (the “Company”). No securities commission or similar authority in Canada has inany way passed upon the adequacy or accuracy of the information contained in this presentation.

Certain of the statements made in this Presentation may contain forward‐looking statements and information within the meaning of applicable Canadian and United Statessecurities law. Forward‐looking statements and information include, but are not limited to statements or information with respect to the resource potential of the Company’sacreage, production amounts, annual cash flow from production, maximum negative cash flow and the Company’s borrowing capacity.

We have made numerous assumptions about the material forward‐looking statements and information contained herein, including among other things, the number of wells tobe drilled in the near term, the future price of oil, well spacing, total drillable locations, reserves, flow rates, recovery per well, initial flow rate per well, capital and operatingexpenses. Some of the technical assumptions are based on industry‐averaged published models, but are not independently verified by third party experts. Some of theinformation regarding reserve potential and drilling locations are based on third party reports provided to the Company. Information provided on the STS Olmos Wellboreeconomics are based on results to date which may vary in the future. We have also made assumptions regarding the amount and availability of capital as well as access toequipment and services necessary to fully execute the development programs that would be needed to reach the long term full resource potential of these properties. Eventhough our management believes that the assumptions made and the expectations represented by such statements or information are reasonable, there can be no assurancethat the forward‐looking statements or information will prove to be accurate.

Forward‐looking statements and information by their nature involve known and unknown risks, uncertainties and other factors which may cause the actual results to bematerially different from any future results expressed or implied by such forward‐looking statements or information. Such risks, uncertainties and other factors include, amongothers, a change in the costs associated with the work programs, the failure of the Company to raise funding in the capital markets required to carry out its proposed workprograms, changes in the laws of the United States that impact on the Company’s ability to carry out its planned work programs, and assumptions regarding exchange rates.Should one or more of these risks, uncertainties or other factors materialize, or should underlying assumptions prove incorrect, actual results may vary materially from thosedescribed in forward‐looking statements and information. Although we have attempted to identify factors that would cause actual results to differ materially from thosedescribed in forward‐looking statements and information, there may be other factors that cause actual results, performances, achievements or events to not be as anticipated,estimated or intended. Also, many of the factors are beyond our control. There can be no assurance that forward‐looking statements or information will prove to be accurate, asactual results and future events could differ materially from those anticipated in such statements. Accordingly you should not place undue reliance on forward‐lookingstatements or information.

The Company’s securities have not been registered under the United States Securities Act of 1933, as amended, and may not be offered or sold within the United States or to orfor the account or benefit of U.S. persons absent U.S. registration or an applicable exemption from the U.S. registration requirements. Any public offering in the United Statesmust be made by means of a prospectus containing detailed information about the Company and management, as well as financial statements.

Except as required by law, we do not intend to update forward‐looking statements and information as conditions change and readers should refer to www.sedar.com for theCompany's filings with the Canadian securities regulatory authorities.


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a cash flowing, by design - Terrace Energyterraceenergy.net/_resources/presentations/terrace...Corporate Overview • Proven Track Record of Securing and Exploiting Low Entry Cost