CALGARY, Dec. 9, 2015 /CNW/ - Twin Butte Energy Ltd. (TSX:TBE) ("Twin Butte" or the "Company")
Twin Butte believes that the current share price is not reflective of the long term value within the Company's asset base, and therefore has initiated a process to identify, examine and consider a range of strategic alternatives available to the Company, with a view to enhancing shareholder value.
Strategic alternatives may include, but are not limited to, a debt restructuring, a sale of all or a material portion of the assets of Twin Butte, either in one transaction or in a series of transactions, the outright sale of the Company, or merger or other transaction involving Twin Butte and a third party, and/or alternative financing initiatives. For the purposes of considering strategic alternatives, Twin Butte has established a special committee consisting of directors, Jim Brown (Chair), Warren Steckley and John Brussa to oversee the process.
Twin Butte has engaged Peters & Co. Limited and National Bank Financial Inc. as its financial advisors to advise the Company in connection with this comprehensive review and analysis of strategic alternatives in connection with the process.
The strategic alternative review process has not been initiated as a result of receiving any offer and there are no assurances that a transaction will be undertaken. It is Twin Butte's current intention not to disclose developments with respect to the process unless and until the Board of Directors has approved a specific transaction, or otherwise determines that disclosure is necessary or appropriate. The Company cautions that there are no assurances or guarantees that the process will result in a transaction or, if a transaction is undertaken, the terms or timing of such a transaction. The Company has not yet set a definitive schedule to complete its identification, examination and consideration of strategic alternatives.
The Company is currently in discussions with its banking syndicate respecting the semi-annual review of its credit facilities. Current availability under the credit facilities remains at $275 million. Based upon initial discussions, Twin Butte anticipates a decrease in total credit facilities to an approximate amount of $230 million consisting of a revolving syndicated facility and a non-revolving syndicated facility, with amendments requiring, inter alia, amortization of the non-revolving facility. The Company anticipates that it will provide an update in respect of the finalization of its credit facilities during the early part of January. Bank debt outstanding, including working capital deficit, as of September 30, 2015 was $228 million and is forecast to be $212 to $216 million at year end 2015.
The transition of Twin Butte's asset base to lower cost, more predictable, medium and heavy oil reservoirs continues to deliver on expectation. The adoption of new technology to the oil rich Provost and Lloydminster areas is improving development economics and has increased the number of drilling locations in the Company's inventory significantly. Average per well costs continue to fall, while average per well productivity has increased. The embedded upside value in Twin Butte is material.
Capital spending is expected to be below $83 million for 2015, below prior guidance, as drilling and completion costs continue to come in below estimates and spending on the Wildmere water flood project has been deferred due to low oil prices.
Twin Butte has significant cash flow torque to even a modest recovery in oil prices. However, at current spot and strip oil prices, cash flow, although positive will be below the level of capital expenditures required to maintain production in 2016.
Twin Butte announces that its Board of Directors has approved the suspension of its monthly dividend effective immediately to further support its balance sheet during this period of commodity price weakness and to ensure that the Company has maximum flexibility entering 2016.
Twin Butte Energy Ltd. is a value oriented intermediate producer with a deep, low risk, drilling inventory focused on medium and heavy oil reservoirs. Twin Butte is positioned to provide shareholders with growth potential over the long term. Twin Butte is committed to continually enhance its asset quality. The common shares of Twin Butte are listed on the TSX under the symbol "TBE".
Certain information set forth in this news release contains forward-looking statements including the assessment of future plans regarding the strategic alternative review process, the anticipated decrease and terms of Twin Butte's credit facilities following completion of the semi-annual review, the anticipated timing of the finalization of the credit facilities, forecast bank debt outstanding as at December 31, 2015 and expected total capital spending for 2015. By their nature, forward-looking statements are subject to numerous risks and uncertainties, some of which are beyond Twin Butte's control, including the impact of general economic conditions, industry conditions, volatility of commodity prices, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, delays resulting from or the inability to obtain required regulatory approvals, inability to retain and delays in retaining drilling rigs and other services, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other industry participants, the lack of availability of qualified personnel or management, stock market volatility, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, and ability to access sufficient capital from internal and external sources. The foregoing list is not exhaustive. Additional information on these and other risks that could affect Twin Butte's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. The actual results, performance or achievement of Twin Butte could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Twin Butte will derive therefrom. Twin Butte disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws.
SOURCE Twin Butte Energy Ltd.
For further information: Twin Butte Energy Ltd., Rob Wollmann, President and Chief Executive Officer, R. Alan Steele, Vice President Finance, Chief Financial Officer and Corporate Secretary, Tel: (403) 215-2045, Website: www.twinbutteenergy.com