VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 17, 2011) - The directors of Terrace Energy Corp. ("Terrace" or the "Company") (TSX VENTURE:TZR) are pleased to provide the following update to shareholders.

The Company's operating subsidiary, Terrace Operating LLC, has now completed the required work program on its Los Patos Gas Unit and fulfilled its obligations under the farm out agreement with Eagle Energy Development Company (The details of the farm out agreement are set out in the Company's press release dated February 4, 2011, which is available for viewing at [ www.sedar.com ]).

The Los Patos Gas Unit #1 was fracture stimulated with 50,000 pounds of Super LC proppant. Currently, the company is swab testing the well in order to determine the production potential of the Yegua formation. To date, the well is still returning load fluids and minor shows of gas. Testing will continue over the next few weeks.

Under the terms of the farm out agreement, the Company has earned an 87.5% working interest and a 68.1875% net revenue interest in the 320 acre Los Patos Unit, situated in Wharton County, Texas.

APPROVED BY THE BOARD OF DIRECTORS

Eric Boehnke, President

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