CALGARY, Dec. 4 /CNW/ - Twin Butte Energy Ltd. ("Twin Butte" or the
"Company") (TBE-TSX) and E4 Energy Inc. ("E4") (EFE-TSXV) are pleased to
announce that they have entered into an acquisition agreement whereby Twin
Butte will acquire by plan of arrangement, subject to certain conditions, all
of the issued and outstanding shares of E4, for total consideration of
approximately $55.6 million, including the assumption of approximately
$17.2 million of net debt (the "Transaction"). Under the terms of the
Transaction, Twin Butte will issue approximately 15.66 million common shares
to the shareholders of E4 based on an exchange ratio of 0.3673 of a Twin Butte
common share for each share of E4 or $0.90/share based on a 10 day weighted
average price of $2.45 for Twin Butte.
Twin Butte will acquire approximately 1,075 BOE/d (55% natural gas,
45% oil & liquids), 3.1 MMBOE of proven plus probable reserves (based on Twin
Butte's internal estimates) and 86,000 net acres of undeveloped land. Based on
the purchase price of $55.6 million and after excluding the undeveloped land
value of approximately $12.9 million, the Transaction metrics are:
- Production - $39,697 per BOE/d based on estimated current production
of 1,075 BOE/d.
- Reserves - $13.77 per proven plus probable barrel of oil equivalent.
- Cash Flow - 4.1 times estimated 2008 cash flow ($6.50/gj AECO,
The Transaction will provide Twin Butte and E4 shareholders, ownership in
a larger, financially stronger company that intends to focus on the
exploitation of the combined companies' large prospect inventory. Based on the
December 4, 2007 closing price of E4 on the TSX Venture Exchange, the
Transaction represents a premium of 30%.
Twin Butte is also pleased to announce that Mr. Paul Starnino and Mr.
James Brown have agreed to join the Twin Butte Board of Directors upon closing
of the Transaction and that the Boards of Directors of both Twin Butte and E4
have unanimously approved the Transaction. The E4 Board has concluded that the
Transaction is in the best interests of its shareholders, and has resolved to
recommend that E4 shareholders vote their shares in favour of the Transaction.
Additionally, all of the directors and senior officers of E4, representing
approximately 14 percent of the outstanding E4 Shares have entered into
lock-up agreements to vote their shares in favour of the Transaction. The
Transaction contains a mutual non-completion fee in the amount of $2 million
which is payable by E4 or Twin Butte to the other, as the case may be, in
certain circumstances if the Arrangement is not completed. The Transaction
requires the requisite approval of E4 shareholders along with customary
regulatory, court and other approvals. An information circular outlining the
Transaction will be mailed to E4 Shareholders in connection with the
shareholder's meeting relating to such approvals to be held in early February,
2008 with a closing scheduled for mid February, 2008.
The Transaction complements Twin Butte's acquire, exploit and explore
growth strategy and provides additional critical mass with regards to
production, land and cash flow further establishing Twin Butte as a
growth-oriented junior. In addition to a solid production base consisting of
45 percent oil, the acquisition brings approximately 86,000 net undeveloped
acres of land, and a new core area in Ft. St. John, British Columbia. The B.C.
assets contribute over 50 percent of E4's current production which will be
unaffected by recent royalty changes proposed in Alberta.
The geographical fit of the SE Alberta assets is enhanced by large oil in
place reservoirs with 3D seismic coverage setting up future drilling
opportunities. Identified well optimization and facility construction is
underway which should provide short term production growth and additional
drilling opportunities. The significant land base in Alberta and B.C. brings
an inventory of over 50 drilling opportunities and a recent new discovery
brings significant growth upside.
Outlook; 2008 Guidance:
Upon closing of the Transaction, Twin Butte will have the following
corporate pro forma characteristics:
- Production levels of more than 3,100 BOE/d, comprising more than
35 percent light oil.
- Greater than 8.9 MMBOE of P+P reserves; RLI of approximately
- Undeveloped land base of approximately 147,000 net acres.
- The Company will operate approximately 90 percent of its production.
- Excellent balance sheet with debt to forward cash flow of
1.4 -1.5 times.
- Tax pools of approximately $200 million, resulting in a significant
long term tax advantage.
- Large drilling inventory of over 75 low risk development and higher
reward exploration locations
- 43.4 million shares outstanding.
Twin Butte shall provide detailed 2008 guidance upon successful
completion of the Transaction.
The Company commenced operations approximately 18 months ago, and has
provided continuous quarter-over-quarter production growth per share. Twin
Butte's focus continues to be on increasing shareholder value through a
combination of grassroots exploration, strategic acquisitions and subsequent
Barrels of oil equivalent ("BOE") may be misleading, particularly if used
in isolation. A BOE conversion ratio has been calculated using a conversion
rate of six thousand cubic feet of natural gas to one barrel and is based on
an energy equivalency conversion method application at the burner tip and does
not represent an economic value equivalency at the wellhead.
Certain information regarding Twin Butte and E4 (the "Companies") set
forth in this joint news release including management's assessment of the
Companies' future plans and operations, the effect of the Transaction on the
Companies and on shareholders of Twin Butte and E4, timing of matters relating
to the approval of the Transaction and implementation thereof, production
increases and future production levels contain forward-looking statements that
involve substantial known and unknown risks and uncertainties. These
forward-looking statements are subject to numerous risks and uncertainties,
certain of which are beyond the Companies' control including, without
limitation, the impact of general economic conditions, industry conditions,
volatility of commodity prices, currency fluctuations, imprecision of reserve
estimates, environmental risks, competition from other producers, lack of
availability of qualified personnel, stock market volatility, ability to
access sufficient capital from internal and external sources, uncertainty
related to completion of the Transaction and the effect thereof and failure to
receive required shareholder and regulatory and other approvals. The
Companies' actual results, performance or achievements may differ materially
from those expressed in, or implied by, these forward-looking statements and,
accordingly, no assurance can be given that any events anticipated by the
forward-looking statements will transpire or occur, or if any of them do so,
what benefits that the Companies will derive therefrom. Additional information
on these and other factors that could affect the Companies' results are
included in reports on file with Canadian securities regulatory authorities
and may be accessed through the SEDAR website (www.sedar.com), at Twin Butte's
website (www.twinbutteenergy.com) or E4's website (www.e4energy.ca).
Furthermore, the forward-looking statements contained in this joint news
release are made as at the date of this joint news release and none of the
Companies undertake any obligation to update publicly or to revise any of the
forward-looking statements, whether as a result of new information, future
events or otherwise, except as may be required by applicable securities laws.
The term "cash flow" is not a recognized measure under Canadian generally
accepted accounting principles ("GAAP"). Management of Twin Butte believes
that in addition to net earnings, cash flow is a useful supplemental measure
as it provides an indication of the results generated by Twin Butte's
principal business activities before the consideration of how these activities
are financed or how the results are taxed. Investors are cautioned, however,
that this measure should not be construed as an alternative to net earnings
determined in accordance with GAAP as an indication of Twin Butte's
performance. Twin Butte's method of calculating cash flow may differ from
other companies, especially those in other industries and accordingly may not
be comparable to measures used by other companies. Twin Butte calculates cash
from operations as cash from operating activities before the change in
non-cash working capital related to operating activities.
Readers are also cautioned that this joint news release contains the term
RLI or reserve life index, which is not a recognized measure under GAAP.
Management of Twin Butte believes that this measure is a useful supplemental
measure of the length of time the reserves would be produced over at the rate
used in the calculation. Readers are cautioned, however, that this measure
should not be construed as an alternative to other terms such as net income
determined in accordance with GAAP as a measure of performance. Twin Butte's
method of calculating this measure may differ from other companies, and
accordingly, it may not be comparable to measures used by other companies.
The TSX has not reviewed and does not accept responsibility for the
adequacy or accuracy of this release.
For further information:
For further information: Twin Butte Energy Ltd., Suite 415, 311 - 6th
Avenue S.W., Calgary, Alberta, T2P 3H2, Ron Cawston, President & Chief
Executive Officer, Tel: (403) 215-2040; R. Alan Steele, Vice President Finance
& Chief Financial Officer, Tel: (403) 215-2692, Website:
www.twinbutteenergy.com; E4 Energy Inc., Suite 540, 840 - 6th Avenue S.W.,
Calgary, Alberta, T2P 3E5; Paul Starnino, President & Chief Executive Officer,
Tel: (403) 266-6747, ext. 27; Franco Civitarese, Vice President Finance &
Chief Financial Officer, Tel: (403) 266-6747, ext. 31, Website: