TSXV: TZR; OTCQX: TCRRF; Germany: 2TRwww.terraceenergy.net

Corporate OverviewOctober 2013

A focused team, creating value through exploration and technology

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Who is Terrace Energy?

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Proven Management

Senior Team with more than 35 years average experience 

Proven Board of Directors

Proven track record of creating excellent long term shareholder returns

Proven Strategy

Identify and acquire emerging acreage, prove concept, delineate value, optimize returns 

Proven Partners

Teamed up with recognized industry leader in completion technology and field operations

Why Invest in Terrace Energy?

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Proven Development Project in Olmos Tight Sandstone Play

Strong cashflow and large inventory of repeatable drilling locations

Expanding Acreage Position in Olmos Project

Initiating Farm‐in negotiations with offset lease holders

Major Acreage Position in Maverick Basin

Hydrocarbons identified in stacked target horizons Opportunity for multi‐fold increases in acreage value

Established Value in Eagle Ford Shale

Asset developed to harvest point, cash value available for redeployment

Corporate Overview

Track Record of Securing and Exploiting Low Entry Cost Opportunities

Key Asset Attributes Substantial Leasehold Position

• 170,000 gross mineral acres (43,000 net to Terrace) Large Drilling Inventory

• Approximately 1,300 gross drillable locations (330 net to Terrace) Solid Reserve Base with Significant Upside Potential

• 8.7 MMBOE P2 reserves net to Terrace (verified by independent evaluation)• Over 200 MMBOE upside potential net to Terrace* 

Extensive Technical Database• 335 square miles of 3‐D seismic data over existing leasehold

Progress to Date  15 Wells Drilled to Date

• 9 wells on production• 2 wells on flowback testing• 3 wells awaiting completion• 1 well drilling ahead

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

Area of Operations

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Cutlass

Maverick County

South Texas Syndicate

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STS Olmos Development Program

SP5 2‐1H

STS 1‐17H

STS AW A 1‐27HCompleting

STS 1‐667H

SP5 2‐47H

SP5 1‐47H

STS 1‐3H

SP5 1‐16H

Progress to Date (8)Future Potential Locations (160)Intra‐Field Gathering System

CENTRALCOMPRESSOR

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30 Day IP Cumulative Production

Well Number BOPD BOEPD BO BOE Days On

STS 1‐667H 563  1,008  87,829  157,214  600

SP5 1‐47H 666  1,192  75,076  134,386  348

SP5 2‐47H 531  950  62,168  111,281  346

SP5 1‐16H 528  945  15,453  27,661  34

SP5 1‐17H 576  1,031  12,670  22,679  22

STS 1‐3H 710  1,271  17,032  30,487  24

SP5 1‐27H *** Currently Testing***

Average 596  1,066 

SP5 1‐2H 173  310  11,394  20,395  122

Totals 281,622  504,103 

STS Olmos Delineation Program Results

STS Olmos Project Type Well Economics

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Typical Development Well CharacteristicsFormation Depth:  8,900’Lateral Lengths:  4,200’Frac Stages:  12‐ 16Initial Production Rate:  1000 BOEPDSpacing:  1,000’ lateral displacement

Project Type Curve AnalysisWell Costs:  $6.5 millionEUR: 407 MBOEPV@ 10%: $5.0 MMUSDInternal ROR: 64%Payout: 1.5 years

Field Level Economic ParametersProduct Mix:

Oil:  56%NGL:  25%Gas: 19%

Effective Wellhead Prices (July 2013):Oil:  $102.26 / BblGas:  $2.34 / MMBTUNGL:  $0.68 / gallon

Effective Realized Price:     $67.87/ BOEDirect Operating Expense: $9.00 / BOECash Margin: $58.87/ BOE

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STS Olmos Tight Sandstone Project

Terrace owns approximately 33% interest in 15,600 gross mineral acres  Highly attractive acquisition terms under $300 per acre Terrace holds approx. 5,105 net mineral acres 160 identified drilling locations (53 net to Terrace) Third party engineered type curve yields 407 MBOE per location (81% liquids)• $5.0 MMUSD PV@10% per location• 64% IRR

Aggressive acreage acquisition program underway 7,800 offset acres under active negotiation 50,000 offset acres under review

Market infrastructure in place to command premium oil prices and high efficiency NGL recovery

Oil pricing at $5.00‐ $8.00 premium to WTI NGL’s routed through “Teak” system at 94% ethane recovery

Tri Bar Olmos Field743 MBO, 47 BCF

Sun TSH Olmos Field1879 MBO, 100 BCF

AWP Olmos Field49 MMBO, 500 BCF

Olmos Log ShowsNueces River

La Salle Co. McMullen Co.

STS Olmos Acreage Expansion

5 miles

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Area of Operations

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Cutlass

Maverick County

South Texas Syndicate

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Maverick County Project

Massive Acreage Position with Multiple Prospective Oil Bearing Horizons

BlackBrush Terrace LP (50% owned by Terrace Energy) acquired a 50% operated working interest  in 147,000 gross acres (230 square miles) from a major oil company

Highly attractive acquisition terms (less than $900 per acre)

• 20% up front cash ($176 per acre)

• 80% drilling carries paid out over 5 years

Terrace holds approx. 36,750 net mineral acres

Project holds the potential for up to 1200 drilling locations in the Pearsall Shale alone

Acreage has multiple productive horizons including all of the active South Texas Cretaceous oil‐bearing formations

Numerous successful Pearsall Shale tests establish Pearsall as a primary development target

Historical vertical well production shows strong potential in the Eagle Ford, Buda, Glen Rose and Georgetown

Project also includes ~300 square miles of proprietary 3D seismic data ($15 ‐ $20 million value)

Farmor has a “rolling option” to re‐acquire formations as each reaches developmental stage

Maverick Co. Initial Evaluation Program

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F‐1H Eagle Ford Producing

Chittim 2HEagle Ford / Buda Evaluation Well

151‐2H Eagle Ford Re‐Entry

Existing PearsallNew PearsallNew Eagle FordExisting Buda

BlackBrush Terrace LP Chittim 1H

Pearsall CompletionEagle Ford / Buda Log Shows

Pearsall Production (3 wells)110,641 BO, 2.53 BCF

Buda Production (5 wells)71,124 BO, 208 MMCF

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Maverick County Project

Initial Delineation Well, The BTLP Chittim 1‐H• Intermediate portion encountered strong hydrocarbon indicators and excellent 

reservoir quality rock in Eagle Ford Shale, Buda Limestone and Georgetown Formations

• Successfully executed 5,000’ of lateral drilling in Pearsall Shale• Strong hydrocarbon indicators during drilling operations• Extensive fracture stimulation and testing program underway

Eagle Ford Shale Evaluation • Chittim F‐1H re‐entry testing over 300 BOPD

• Currently pump testing• BTLP Chittim 2‐H offset to Chittim F‐1H drilling in progress

• Took full well core in Eagle Ford and Buda before turning horizontal• Will complete using “Gas Frac” technology

• Planned re‐entry of Chittim 152 H‐1 in Q1 2014

Buda Limestone Evaluation• Notable historical vertical production on lease• Exceptional mud log shows and logged rock characteristics both new wells• Full well core of Buda in Chittim 2‐H in laboratory now• Recommend initial evaluation well to be drilled in Q1 2014

Further Exploration Planning• Extensive mapping project underway to fully exploit 3‐D seismic data set

Emerging Pearsall Shale Trend

Maverick County

26 Older Vertical Wells 14 Horz Wells w/ < 2 Year Prod

REGIONAL PEARSALL ACTIVITY

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Source: IHS Production Data

Eagle Ford Shale Trend

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TexStar Gathering and Treating Facilities

Area of Operations

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Cutlass

Maverick County

South Texas Syndicate

Avenues for Organic Growth

Acquire Offset Acreage

Multiple negotiations in progress offsetting STS Project Drill‐to‐earn discussions underway for Buda Limestone development

Accelerate Development Through Drilling Partnerships

Apply Advanced Technology

Initiating first Pearsall fracture stimulation in Maverick County Initiating “Gas‐Frac” technology for Eagle Ford in Maverick County  Evaluating “Gas‐Frac” technology at STS project

Explore Additional Horizons in Maverick County Project

Active evaluation program in Eagle Ford Shale Highly prospective reservoir indicators in Buda Limestone

• Initial horizontal test scheduled for Q1 2014

Excellent shows in secondary cretaceous targets (Glen Rose, Georgetown, McKnight)19

Capital Structure

Share Structure:

Issued and Outstanding: 63,199,321

Insider Held Warrants and Options: 10,012,500Restricted Stock Units: 950,000

Convertible Notes*: 19,950,000

Fully Diluted: 94,111,821

Management & Directors: 38.5%

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*Conversion Price= $2.00 CDN

Key Operations Management

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Dave Gibbs – President & CEO, DirectorMr. Gibbs received a Bachelor of Engineering degree from Georgia Tech in 1975 and has 38 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.

George Morris‐ Sr. Vice President & COOMr. Morris holds a BS in Mechanical Engineering from Colorado State and has 35 years experience in reservoir, drilling and production engineeringactivities as well as directing acquisition and exploitation efforts for both large and small E&P companies. Mr. Morris held executive and managementpositions with ATP Oil & Gas, Chroma E&P, TDC Energy, Burlington Resources, Louisiana Land and Exploration, Nerco Oil & Gas and Union TexasPetroleum. Mr. Morris has concentrated experience in the Gulf of Mexico, Texas and Louisiana Gulf Coast, East Texas and West Texas.

Bill McMoran – Vice President, ExplorationMr. McMoran holds both a BS and an MS in Geology from University of Arkansas and brings more than 45 years’ experience in oil and gas explorationwith Texaco and several independent exploration companies. As Exploration Manager of Pelto Oil Company, Mr. McMoran was responsible for thediscovery and development of 120 billion cubic feet of gas (equivalent). He was also the Exploration Manager of Whittier Energy from its start‐up to itsmerger with Atinum Energy in 2009. During his career, Mr. McMoran has been involved in the discovery of over 200 million barrels of oil (equivalent).

Dan Morris – Vice President, GeosciencesMr. Morris holds a BS in Geophysical Engineering from Colorado School of Mines and a Master’s degree from the American Graduate School ofInternational Management and has 30 years of domestic and international experience in exploration, seismic acquisition, processing and interpretation.Mr. Morris possesses an in‐depth understanding of oil and gas prospect development, asset acquisitions and the strategic use of technology. He hassignificant domestic exploration experience in Texas and Louisiana and international experience in China, Nigeria, Argentina, Indonesia, Malaysia, Egyptand England. Mr. Morris also has extensive technical knowledge of seismic data acquisition, data processing, and interpretation.

Board of Directors

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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 1992 until the sale ofCorriente to CRCC‐Tongguan Investment (Canada) Co., Ltd. (owned jointly by Tongling Nonferrous Metals Group Holdings Co., Ltd. and China Railway ConstructionCorporation Limited) for approximately $678 million in mid‐2010. During the past 20 years, Mr. Carriere has been instrumental in the development and financingof small to medium capitalized companies, both private and public, in Canada and the USA. Mr. Carriere was also a Director and significant shareholder of IDBiomedical Corporation since the Company's initial public offering in 1991. ID Biomedical grew from an initial $3 million market capitalization to $1.7 billion at thetime of its takeover offer from Glaxo Smith Kline plc in 2005.

Eric Boehnke – Executive Vice ChairmanMr. Boehnke has been the President and a Director of Big Sky Management Ltd., a private company principally involved with providing corporate finance servicesto private and public companies. Mr. Boehnke has been an officer and director of a number of public companies, including Petra Petroleum (TSXV: PTL), acompany 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 Accountants of BritishColumbia since 1980. Since 1990, Mr. McCartney has been the President of Pemcorp Management Inc., a private company which provides corporate finance andadministrative 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 capital structuring. He is a currently a member of the local (policy) advisorycommittee to the Toronto Stock Exchange and TSX Venture Exchange. He is a present or past director of: Mercer International Inc., Sunward Resources Corp.,Newstrike Capital Inc., Exeter Resource Corp. and Dynasty Metals & Mining Inc. among others.

Murray J. Oliver ‐ DirectorMr. Oliver has a B.A. in economics and over 19 years experience as a private consultant providing corporate finance, restructuring and shareholdercommunication services to both private and public companies. Mr. Oliver has worked with the Pemcorp Group of Companies since 1995 and has served as VicePresident of Business Development since 2000. He is currently the director of Corporate Communications for Dynasty Metals & Mining (TSX:DMM); a director of;Karsten Energy (TSXV: KAY)and Prospero Silver Corp (TSXV:PSL).

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 thirty years. He hasparticipated in the grass roots discovery of over 30 Billion pounds of copper in Argentina and Ecuador as well as managing work on feasibility and pre‐feasibilitystudies for various commodities in Bolivia, Ecuador and British Columbia. As CEO of Corriente Resources and other companies he has helped to raise over $200Million of venture capital for mining exploration and development. In 2010, Corriente was sold to CRCC‐Tongguan Investment (Canada) Co., Ltd. (owned jointly byTongling Nonferrous Metals Group Holdings Co., Ltd. and China Railway Construction Corporation Limited) for approximately $678million.

Contacts

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info@terraceenergy.net

canadian addressSuite 1012‐1030 West Georgia St. 

Vancouver B.C.V6E 2Y3

p 604 282 7897 f 604 629 0418

us addressSuite 400 ‐ 202 Travis St. 

Houston, TX77002

p 713 227 0010f 713 227 0492

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.