Twin Butte Energy announces year end reserves and finding, development and
acquisition costs

CALGARY, Feb. 16 /CNW/ - (TSX: TBE) - Twin Butte Energy Ltd. ("Twin Butte") or ("Company") is pleased to provide information on its oil and gas reserves as of December 31, 2009, as evaluated by the Company's independent reserve engineering firm, McDaniel & Associates Consultants Ltd ("McDaniel"). The evaluation of Twin Butte's petroleum and natural gas reserves was conducted pursuant to National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101") and the Canadian Oil and Gas Evaluation Handbook ("COGEH") reserves definitions.

Highlights of the Twin Butte 2009 capital program and year end reserves are as follows:

    
    -   Executed an exploration and development capital program of
        $16.5 million which included the drilling of 18 gross (11.5 net)
        wells with a 94 percent success ratio.

    -   Completed two strategic corporate acquisitions valued at $130 million
        which significantly enhanced the Company's oil exposure, drilling
        inventory and overall asset quality.

    -   Completed 5 non-core asset dispositions to enhance balance sheet
        flexibility and further focus the Company asset base.

    -   A 188 percent increase in total proved plus probable oil and gas
        reserves, an increase of 19.9 million barrels of oil equivalent
        ("boe") to 30.5 million boe.

    -   Finding, development and acquisition ("FD&A") costs of $5.98 per boe
        on a proved plus probable basis and $9.59 per boe on a proved basis.

    -   A capital recycle ratio of 3.2 times on proved plus probable FD&A.

    -   Current reserve life index of 13.3 years based on proved plus
        probable reserves and an estimated December 2009 production level of
        6,300 boe/d and 8.2 years based on proved reserves.

    -   Net asset value per share based on proved plus probable reserves of
        $3.13 ($3.06 fully diluted)


    Corporate Reserves Summary

    December 31, 2009 Summary Reserves (Company interest before royalties)

    -------------------------------------------------------------------------
                            Light/Med
    McDaniel - December 31,   Crude
     2009 escalated price     Oil &     Heavy    Natural    Oil
     forecast                 NGL's      Oil       Gas   Equivalent  % Total
    -------------------------------------------------------------------------
    (Columns may not add                                   (Mboe)
     due to rounding)        (Mbbls)   (Mbbls)    (BCF)     (6:1)
    -------------------------------------------------------------------------
    Proved Developed
     Producing               2,562.5   1,016.9      66.8  14,714.7      48.2
    -------------------------------------------------------------------------
    Proved Developed
     Non-Producing             121.7         0       3.4     689.4       2.3
    -------------------------------------------------------------------------
    Proved Undeveloped         692.2   1,015.0      10.9   3,518.6      11.5
    -------------------------------------------------------------------------
    Total Proved             3,376.4   2,031.9      81.1  18,922.7      62.0
    -------------------------------------------------------------------------
    Total Probable           1,791.6   3,555.1      37.5  11,603.9      38.0
    -------------------------------------------------------------------------
    Total Proved Plus
     Probable                5,168.0   5,587.0     118.6  30,526.6       100
    -------------------------------------------------------------------------
    Total Proved Plus
     Probable Developed
     Producing               3,193.7   1,409.7      82.2  18,297.8      59.9
    -------------------------------------------------------------------------



    Net Present Value of Future Net Revenue

    December 31, 2009 Net present Values ("NPV") Summary (Company interest
    before royalties)

    -------------------------------------------------------------------------
    ($ MM)                       Before Income Taxes Discounted At (%/year)
    -------------------------------------------------------------------------
    Reserves Category
     (columns may not
     add due to rounding)        0%        5%       10%       15%       20%
    -------------------------------------------------------------------------
    Proved Developed
     Producing                 434.4     280.4     215.5     179.6     156.4
    -------------------------------------------------------------------------
    Proved Developed
     Non-Producing              13.6      10.9       8.8       7.3       6.1
    -------------------------------------------------------------------------
    Proved Undeveloped          80.5      50.3      34.8      25.3      18.9
    -------------------------------------------------------------------------
    Total Proved               528.5     341.6     259.1     212.2     181.4
    -------------------------------------------------------------------------
    Total Probable             356.1     210.4     150.2     115.1      91.4
    -------------------------------------------------------------------------
    Total Proved Plus
     Probable                  884.7     552.0     409.3     327.3     272.7
    -------------------------------------------------------------------------



    Select Summary Pricing and Inflation Rate Assumptions (Forecast Prices)

    -------------------------------------------------------------------------
                                         Alberta
                     Edmonton  Alberta   Natural
               WTI     Light    Heavy      Gas    Edmonton
              Crude    Crude    Crude     AECO -     NGL  Inflation Exchange
               Oil      Oil      Oil       Spot      Mix     rate     rate
    Year    ($US/bbl) ($C/bbl) ($C/bbl) ($C/MMbtu) ($C/bbl) %/Year ($US/$Cdn)
    -------------------------------------------------------------------------
    2010       80.00    83.20    68.10     6.05     60.30      2.0      0.95
    -------------------------------------------------------------------------
    2011       83.60    87.00    67.60     6.75     63.50      2.0      0.95
    -------------------------------------------------------------------------
    2012       87.40    91.00    68.00     7.15     66.50      2.0      0.95
    -------------------------------------------------------------------------
    2013       91.30    95.00    68.10     7.45     69.40      2.0      0.95
    -------------------------------------------------------------------------
    2014       95.30    99.20    71.10     7.80     72.50      2.0      0.95
    -------------------------------------------------------------------------
    2015       99.40   103.50    74.20     8.15     75.60      2.0      0.95
    -------------------------------------------------------------------------
    2016      101.40   105.60    75.70     8.40     77.20      2.0      0.95
    -------------------------------------------------------------------------
    2017      103.40   107.70    77.20     8.55     78.70      2.0      0.95
    -------------------------------------------------------------------------
    2018      105.40   109.80    78.70     8.70     80.30      2.0      0.95
    -------------------------------------------------------------------------
    2019      107.60   112.10    80.40     8.90     82.00      2.0      0.95
    -------------------------------------------------------------------------
    there-
     after       +2%      +2%      +2%      +2%       +2%      2.0      0.95
    -------------------------------------------------------------------------



    Corporate Working Interest Reserves Reconciliation (Forecast Prices and
    Costs)

    -------------------------------------------------------------------------
                                                                    Total
                                                                 Proved plus
    Oil Equivalent (Mboe)                         Total Proved     Probable
    -------------------------------------------------------------------------
    Opening Balance                                  6,985.5        10,603.1
    -------------------------------------------------------------------------
    Extensions/Discoveries                             316.6         1,147.6
    -------------------------------------------------------------------------
    Technical Revisions                                291.9           (17.0)
    -------------------------------------------------------------------------
    Acquisitions                                    13,044.3        20,663.8
    -------------------------------------------------------------------------
    Dispositions                                      (400.3)         (555.4)
    -------------------------------------------------------------------------
    Production                                      (1,315.4)       (1,315.4)
    -------------------------------------------------------------------------
    Closing Balance                                 18,922.7        30,526.6
    -------------------------------------------------------------------------



    Capital Efficiency - Finding, Development and Acquisition Costs
    ($000's) except as noted

    -------------------------------------------------------------------------
                                                                 Proved plus
    Exploration and Development                      Proved       Probable
    -------------------------------------------------------------------------
    2009 Capital Expenditures(1)                    16,288.7        16,288.7
    -------------------------------------------------------------------------
    Future development capital ("FDC")
     opening balance - 12/31/2008(2)                41,683.7        59,192.7
    -------------------------------------------------------------------------
    FDC closing balance - 12/31/2009(2)             26,928.6        56,158.6
    -------------------------------------------------------------------------
    Total Change in FDC(2)                         (14,755.1)       (3,034.1)
    -------------------------------------------------------------------------
    Total Capital Expenditures with FDC(1)           1,533.6        13,254.6
    -------------------------------------------------------------------------
    Reserve additions and revisions from
     exploration & development (mboe)                  608.5         1,130.6
    -------------------------------------------------------------------------
    Finding & development costs before FDC ($/boe)     26.77           14.41
    -------------------------------------------------------------------------
    Finding & development costs including
     FDC ($/boe)                                        2.52           11.72
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
                                                                 Proved plus
    Acquisition less Disposition                     Proved       Probable
    -------------------------------------------------------------------------
    2009 Net Capital(3)                            110,820.7       110,820.7
    -------------------------------------------------------------------------
    FDC opening balance 12/31/2008(2)                      0               0
    -------------------------------------------------------------------------
    FDC closing year 12/31/2009(2)                  22,112.9        58,238.4
    -------------------------------------------------------------------------
    Total Change in FDC(2)                          22,112.9        58,238.4
    -------------------------------------------------------------------------
    Total Capital Expenditures with FDC(3)         132,933.6       169,059.1
    -------------------------------------------------------------------------
    Reserve Additions (mboe)                        12,644.0        20,108.4
    -------------------------------------------------------------------------
    Acquisition costs before FDC ($/boe)                8.76            5.51
    -------------------------------------------------------------------------
    Acquisition costs including FDC ($/boe)            10.51            8.41
    -------------------------------------------------------------------------



    -------------------------------------------------------------------------
                                                                 Proved plus
    Total FD&A                                       Proved       Probable
    -------------------------------------------------------------------------
    2009 Total Capital Expenditures(4)             127,109.4       127,109.4
    -------------------------------------------------------------------------
    FDC opening balance - 12/31/2008(2)             41,683.7        59,192.7
    -------------------------------------------------------------------------
    FDC closing balance - 12/31/2009(2)             49,041.5       114,397.0
    -------------------------------------------------------------------------
    Total Change in FDC(2)                           7,357.8        55,204.3
    -------------------------------------------------------------------------
    Total Capital Expenditures with FDC(4)         134,467.2       182,313.7
    -------------------------------------------------------------------------
    Total Reserve Additions (mboe)                  13,252.5        21,239.0
    -------------------------------------------------------------------------
    FD&A costs before FDC ($/boe)                       9.59            5.98
    -------------------------------------------------------------------------
    FD&A costs including FDC ($/boe)                   10.15            8.58
    -------------------------------------------------------------------------
    (1) Capital expenditures for fiscal 2009 are estimated and unaudited and
        include drilling credits of $668k

    (2) Future capital expenditures required to convert proved non-producing
        and probable reserves into proved producing which do not include
        drilling credits

    (3) Based on cash and share consideration plus assumed net debt

    (4) Total capital expenditures are estimated and unaudited and are net of
        the capital proceeds associated with the Company's 2009 non-core
        property disposition program. Total capital expenditures exclude
        non-cash ARO and future tax allocations
    

Under NI 51-101, the methodology to be used to calculate FD&A costs includes incorporating changes in future development capital required to bring the proved undeveloped and probable reserves to proved producing status. For continuity, Twin Butte has presented FD&A costs calculated both excluding and including FDC. Changes in forecast FDC occur annually as a result of development, acquisition and disposition activities and capital cost estimates that reflect the independent evaluators' best estimate of what it will cost to bring the proved undeveloped and probable reserves on production.

Reserve Life Index (RLI)

The reserve life index has been calculated based on year end reserves divided by estimated December 2009 production rates.

    
    -------------------------------------------------------------------------
                                                                 Proved plus
                                                     Proved       Probable
    -------------------------------------------------------------------------
    Total Company Interest Reserves (mboe)          18,922.7        30,526.6
    -------------------------------------------------------------------------
    Estimated December 2009 production (boe/d)         6,300           6,300
    -------------------------------------------------------------------------
    RLI based on estimated December 2009
     production (years)                                  8.2            13.3
    -------------------------------------------------------------------------
    

Net Asset Value

The following net asset value ("NAV") table shows NAV calculation under which the Company's reserves would be produced at forecast future prices and costs. The value is a snapshot in time and is based on various assumptions, including commodity prices and foreign exchange rates that vary over time. It should not be assumed that the NAV represents the fair market value of Twin Butte shares. The calculations below do not reflect the value of the Company's prospect inventory to the extent that the prospects are not recognized within the NI 51-101 compliant reserve assessment.

    
    Using Reserve Value at December 31, 2009 - Forecast Pricing and Costs
    (Pre tax)

    -------------------------------------------------------------------------
    ($MM except as noted)                     10% Before Tax  15% Before Tax
    -------------------------------------------------------------------------
    Proved plus Probable Reserve Value                 409.3           327.3
    -------------------------------------------------------------------------
    Undeveloped Land Value(1)                           37.3            37.3
    -------------------------------------------------------------------------
    Estimated Net Debt                                (102.9)         (102.9)
    -------------------------------------------------------------------------
    Option Proceeds                                      3.8             3.8
    -------------------------------------------------------------------------
    Basic Shares Outstanding                           109.7           109.7
    -------------------------------------------------------------------------
    Estimated Net Asset Value $ per Share -
     Basic                                             $3.13           $2.39
    -------------------------------------------------------------------------
    Fully Diluted Shares Outstanding                   113.7           113.7
    -------------------------------------------------------------------------
    Estimated Net Asset Value $ per Share -
     Fully Diluted                                     $3.06           $2.33
    -------------------------------------------------------------------------
    (1) Independent assessment of 269,708 net undeveloped acres at average
        price of $138/acre
    

Twin Butte anticipates releasing its audited financial statements for the year ended December 31, 2009, on or about March 25, 2010.

As highlighted by the Company's year end reserve report, 2009 was a year of positive growth and transition. The acquisition of Can-able Energy Ltd. in July and Buffalo Resources Corp. in October were significant steps in our plan to build a larger, more focused, higher asset quality Company. Our organic exploration and development program of approximately $16.3 million, while significantly weighted to the fourth quarter ($8.0 million), maintained our base production while starting to focus on play types and areas that can make a meaningful difference to future corporate growth.

All aspects of corporate performance improved in 2009. At year end over 80 percent of our corporate reserve evaluation was focused in our core growth areas. Our plan is working and year end 2009 performance shows that. The plan will continue to unfold in 2010.

Twin Butte is a value oriented emerging intermediate producer with a significant repeatable and scalable drilling inventory focused on large original oil in place and large original gas in place play types. With a stable low decline production base the Company is well positioned to live within cash flow while providing shareholders with sustainable growth potential over both the short and long term. The 2010 capital plan is highly focused to two core areas (Alberta Plains and West Central Alberta/Deep Basin) while providing the flexibility to quickly be accelerated should economic conditions allow. Twin Butte is committed to continually enhance its asset quality while focusing on per share growth.

Forward-Looking Statements

In the interest of providing Twin Butte's shareholders and potential investors with information regarding Twin Butte and Buffalo, including management's assessment of the future plans and operations of Twin Butte, certain statements contained in this news release constitute forward-looking statements or information (collectively "forward-looking statements") within the meaning of applicable securities legislation. Forward-looking statements are typically identified by words such as "anticipate", "continue", "estimate", "expect", "forecast", "may", "will", "project", "could", "plan", "intend", "should", "believe", "outlook", "potential", "target" and similar words suggesting future events or future performance. In addition, statements relating to "reserves" are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves described exist in the quantities predicted or estimated and can be profitably produced in the future.

With respect to forward-looking statements contained in this news release, we have made assumptions regarding, among other things: future capital expenditure levels; future oil and natural gas prices and differentials between light, medium and heavy oil prices; future oil and natural gas production levels; future exchange rates and interest rates; our ability to obtain equipment in a timely manner to carry out development activities; our ability to market our oil and natural gas successfully to current and new customers; the impact of increasing competition; our ability to obtain financing on acceptable terms; and our ability to add production and reserves through our development and exploitation activities. Although Twin Butte believes that the expectations reflected in the forward-looking statements contained in this document, and the assumptions on which such forward-looking statements are made, are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking statements included in this document, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that the predictions, forecasts, projections and other forward-looking statements will not occur, which may cause Twin Butte's actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things, the following: volatility in market prices for oil and natural gas; general economic conditions in Canada, the U.S. and globally; and the other factors described under "Risk Factors" in Twin Butte's most recently filed Annual Information Form available in Canada at www.sedar.com. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking statements contained in this news release speak only as of the date of this news release. Except as expressly required by applicable securities laws, Twin Butte does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The forward-looking statements contained in this news release are expressly qualified by this cautionary statement.

Barrels of Oil Equivalent

Barrels of oil equivalent (boe) are calculated using the conversion factor of 6 Mcf (thousand cubic feet) of natural gas being equivalent to one barrel of oil. Boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf:1 bbl (barrel) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

This joint news release does not constitute an offer to sell or the solicitation of an offer to buy any securities within the United States. The securities to be offered have not been and will not be registered under the U.S. Securities Act of 1933, as amended, or any state securities laws, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of such Act or other laws.

%SEDAR: 00001562E

SOURCE Twin Butte Energy Ltd.

For further information: For further information: Twin Butte Energy Ltd., Jim Saunders, President and Chief Executive Officer, Tel: (403) 215-2040, Fax: (403) 215-2055; R. Alan Steele, Vice President, Finance, Chief Financial Officer and Corporate Secretary, Tel: (403) 215-2692, Fax: (403) 215-2055; Website: www.twinbutteenergy.com

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