Building Value

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Building Value

• CAPP Symposium

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• ADVISORY Certain information regarding Terra
  Energy Corp. including managements assessment of
  future plans and operations, may constitute
  forward-looking statements under applicable
  securities laws and necessarily involve risks
  associated with oil and gas exploration,
  production, marketing and transportation such as
  loss of market, volatility of prices, currency
  fluctuations, imprecision of reserve estimates,
  environmental risks, competition from other
  producers and ability to access sufficient
  capital from internal and external sources. As a
  consequence, actual results may differ materially
  from those anticipated in the forward-looking
  statements.

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Corporate History

• Today, Terra Energy is a full cycle exploration
  and production company focused on North-East B.C.
  and Peace River Arch region of AB
• Operations initiated in 1996 as a private company
• Became a public company on January 30, 2004
• Highlight of 2004 was acquisition of Dominion
  Exploration assets
• Completed in December 2004 (31mm)
• Combined with existing lands, formed nucleus of
  Ft St. John Core Area
• Highlight of 2005 was our Summer Drilling Program
• 100 exploration drilling success (11 gross / 9.8
  net)
• Over 10 new pools discovered
• Focus for 2006 will be developing infrastructure

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Corporate Profile
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Production Profile

• Assuming 400 boe/d of asset rationalization and
  completion of major infrastructure plans, Terra
  Energy is forecasting a target exit production
  rate of 4,600 6,000 boe/d

Exit Target Range
Exit Target
Q1 Onstream
Production Capability Behind Pipe Production
Capability
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Business Strategy

• Our objective is to build value and to be the
  most attractive investment amongst peers
• Based on metrics (FD lt 10.00)
• More than simply metrics, creating a strategic
  asset (concentration of land holdings and
  operations, operatorship, ownership of
  facilities, high working interest)
• Most attractive investment also synonymous
  with most desirable take-out candidate
• Growth through value creation / through the drill
  bit
• 100 exploration drilling success in 2005 Summer
  Drilling Program
• 87 total drilling success (all wells)
• Create core areas to Focus capital investment
  and control our own infrastructure

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Investment Highlights

• Compelling valuation
• Current Market Capitalization - 139.3 MM (1.95
  / Share) - 43,530 per flowing BOE
• Enterprise Value - 183.1 MM - 57,203 per
  flowing BOE
• Debt is approx. 1.0x forward cash flow
• 2005 Year end NAV Per Share - 3.10 (basic) /
  2.82 (diluted)
• Quality reserves profile
• High-quality reserves, RLI approx. 8.9 years
• We have become a resource play, 14.2 MMBOE of
  proved probable reserves (85 / 15 gas / oil
  mix)

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Investment Highlights (cont)

• Company wide, Terra Energy operates over 90 of
  its production
• Core area of Fort St. John contains gt80 of
  production / 86 reserves
• Multi-zone exploitation with large land base
  (115,000 total acres (gross), 185 total sections
  (gross))
• Ownership / control of facilities creates
  competitive advantage and lower operating costs
• Year round access on most properties allows for
  counter-cyclical calendar and lower FD costs
• 2006 CAPEX budget of 66.1mm
• 90 of budget targeting high impact Fort St. John
  core area
• Targeting up to 25 wells, which can be scaled
  back in light of changing market conditions
• Major infrastructure projects planned in 2006
• Experienced management team

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2007 Cashflow Forecast Based on Target 2006 Exit
Rate
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Management Team

• Over 200 years of diversified energy experience
• Technical expertise and proficiency in all key
  disciplines
• Management team
• Cas H. Morel, President CEO B.Sc., LLB,
  MBA 20 years
• Bud K. Love, VP Finance CFO Startech 20
  years
• Tim A. Beatty, VP Drilling and Comp. PanCan 20
  years
• T. A. (Tim) Blair, VP Land Acclaim Energy 20
  years
• John Behr, VP Exploration Domin, Rio Alto 20
  years
• Michael Oforsagd, Chief Geologist Dome,
  Amoco 30 years
• Graham Collins, Manager Prod. Ops. Rigel 25
  years
• Gord Oliver, Manager Exploitation
  Stellarton 20 years
• John Hrycyk, Manager Facilities Design
  Apache 13 years
• Rosa Lyngberg, Controller PWC 12 years
• John Pantazopoulos, Manager Bus. Devel CIBC 6
  years

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Board of Directors

• Our Board is comprised mainly of independent
  members with extensive industry background and
  governance expertise
• Ted S. Anderson Founder, Pioneer Land
  Environmental Services Ltd.
• Ralph G. Evans Petroleum engineer and former
  board member of the ERCB (AEUB)
• Anthony R. Harvey Businessman, extensive public
  company experience Fluor- Daniels
• Colin P. MacDonald Partner, Borden Ladner
  Gervais LLP
• Cas H. Morel President and CEO, Terra Energy
  Corp.
• Robert D. Penner Former senior tax partner,
  KPMG

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2006 CAPEX Summary

• Terra Energy has an aggressive 2006 CAPEX plan
  which can be scaled down in light of changing
  market conditions
• 66.1mm CAPEX budget (does not include
  acquisitions)
• 2006 CAPEX budget
• One drilling rig for entire year
• One / two additional rigs July Nov
• Improved Rig availability
• Lower drilling costs
• Safer / more efficient
• BC royalty relief
• 16.6mm for infrastructure to tie-in behind pipe
  reserves and new discoveries

16.6mm
34.0mm
15.5mm
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2006 CAPEX

• Terra Energy is proceeding with several key
  infrastructure projects
• Boudreau East 18km pipeline connecting 2005 new
  pool discovery scheduled Oct (500 boe/d)
• Three projects proceeding in Tower providing both
  short term and long term production solution
• Intermediate tie-in scheduled July (150 boe/d)
• East / West gaterhing line to flow gas to Terra
  Energy Wilder facility scheduled Nov (500 boe/d)
• Peace River Crossing enables full production
  solution as all behind pipe reserves are brought
  onstream scheduled Dec. (350 1,500 boe/d)
• Terra Energy will fund its capital expenditures
  through a combination of cash flow, credit
  facility (recently increased to allow for this
  purpose), proceeds from potential non-core
  asset rationalizations and proceeds from the
  exercise of outstanding warrants / options

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Final Notes

• Compelling value
• Strategic asset base in Fort St. John
• Priority on building infrastructure in 2006
• Reserves growth expected to continue
• Netbacks, operating costs and related metrics all
  expected to continue to improve in 2006

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Building Value

• CAPP Symposium