Wednesday, March 06, 2013

Terrace Energy (TCRRF) and Oil in Texas

Terrace Energy (TCRRF / TZR.V) is a Canadian company with oil wells in South Texas.  Yee-hah.  Their President is a petroleum engineer, which is good news for a producer.  I can't figure out why they've got a separate CEO who's not an engineer, or what all those directors do to add value.

I kind of admire this one for having initial operational success.  They've got producing test wells, for crying out loud.  They think they can drill another 72 wells at their Olmos project.  They also see potential at their Eagle Ford project.  Potential is nice but sustained production is better.  Their operating cost per BOE looks dirt cheap but it's too bad they have to use "gas fracking," a method of injecting natural gas that I consider to be a waste of a potential energy source.  Their cost is cheap as long as natural gas in North America is cheap.

Terrace Energy's October 2012 financial statement showed C$1.5M in cash on hand.  They have started earning revenue so the question of a burn rate should be moot in 2013.  Terrace is a young company so there isn't much for me to add at this point.  Maybe I'll say something else about them in a few months.

Full disclosure:  No position in Terrace Energy at this time.