CALGARY, Sept. 30 /CNW/ - Twin Butte Energy Ltd. ("Twin Butte" or the
"Company") (TSX: TBE) has completed one of the most active quarters in Company
history and is pleased to provide an operational update on the Company's third
To date during the quarter Twin Butte has drilled 12 gross (12 net) wells
including the Montney earning well in the Brassey area of NE British Columbia,
and has 8 wells currently in the completion or tie-in stage. The Brassey
horizontal well has been cased, completed and is currently being flow tested.
As a result Twin Butte has earned a 60% working interest in all 4 sections of
the Brassey land block. In the Kelly area of NE British Columbia a second
earning well was spud on September 19th to test the Montney and Doig
formations fulfilling the spud commitment for the second 11 section earning
block. Additionally, during the quarter the Company completed a 4 well
drilling program at Bulwark, a 2 well program at Thunder, a 2 well program at
Provost, a 2 well program at Richdale and a 1 well program at Lagarde with
ongoing completion and tie in activities in all areas.
Twin Butte remains on track with the planned capital expenditure program
to meet our exit production target. In the second half, a significant portion
of capital has been allocated towards the NE British Columbia Montney resource
play earning wells. While capital expenditures on these projects are
significant, this will position the Company with a material land base in a
world class resource play that represents a significant growth opportunity for
Twin Butte shareholders.
In North East British Columbia, the Company has been actively executing a
multi well drilling program in the Brassey, Kelly and Lagarde areas.
At Brassey, Twin Butte has cased and completed the earning well on a 4
section land block and is currently flow testing the earning well at a rate in
excess of 1.3 mmcfd. The Company has now earned a 60% working interest in the
4 section block and the rights will be continued for a 5 year term. The well
was drilled as a vertical stratigraphic test then plugged back and drilled
horizontally with Twin Butte paying 100% of the costs through casing point and
60% for completion through tie-in as per the terms of the farmin agreement.
The second farm-in on a 10 DSU (11 section) block in the Kelly area was
spud on September 19th and is prospective for both Montney and Doig production
and this initial well directly offsets an 8 mmcf/d Doig producing well. The
Company will drill and complete one vertical test well at 100 percent working
interest to earn a 60 percent working interest in the entire 11 section block.
Twin Butte is the operator and all costs after completion of the initial
vertical well including all follow up wells will be shared 60:40.
Through this initial work Twin Butte has earned a significant land
position in the Montney play under excellent terms and this land position will
be the foundation for future growth. To date industry players have purchased
lands offsetting the Brassey land block and several competitors are actively
drilling in the area. The Brassey lands directly offset recent land sales
where bonus prices ranging from $3.9 to $8.5 million were paid per section,
placing an equivalent land value of up to $75 million on the 9 net sections of
Twin Butte farmin land. This represents a value of up to $1.73 per fully
diluted share. Montney pay from the first well averaged 73 meters in vertical
thickness confirming a potential original gas in place (OGIP) reserve estimate
of more than 50 BCF per section. Test rates indicate that the well is capable
of stable economic production in excess of 1.3 mmcfd and tie in preparations
are currently underway.
At Lagarde the Company has cased a step out well targeting the Baldonnel
formation which is scheduled for completion in early October. Preparations for
tie in are underway and based on a successful test the well would commence
production in late October with a follow up well planned for Q1 2009.
At Oak a multi well development drilling program is slated to commence in
January 2009 targeting the Baldonnel and Halfway formations. The company is
currently preparing for a 3-4 well program and facility plans are being
finalized with operations to commence in early 2009.
At Jayar, the Company has optimized production from the Dunvegan
multifrac horizontal well drilled in Q2 of this year. The well is currently
producing at rates in excess of 180 boepd and the Company is planning a second
horizontal well which is scheduled to be drilled in the first quarter of 2009.
The Jayar Dunvegan pool is a low permeability reservoir that had been
previously developed utilizing vertical drilling and completion technology.
Successful development represents significant upside potential from this
37.5 mmbbl OOIP light oil reservoir where Twin Butte holds an average 85.5%
Twin Butte drilled two wells in the Thunder area in the third quarter and
is currently working on well tie-in operations. Production is expected in
early October and based on results the Company has a potential multi well oil
development program for the first quarter of 2009. This program was the first
of several ongoing exploration leads in the area that are currently being
evaluated with 2D and 3D seismic.
At Provost, the Company has cased two additional horizontal step out
wells targeting the Dina "RR" pool. This is a follow up to a successful two
well horizontal drilling program completed in the first quarter. All wells now
produce to a Company operated battery facility that came on line in the first
quarter accommodating onsite treatment and water disposal. The current
drilling represents the second round in a multi well development program of up
to 10 total wells with production from the new wells expected in early October
and an additional two well program planned for the fourth quarter. The Dina RR
pool contains an estimated 10 million bbls of original oil in place ("OOIP")
with only 120,000 bbls recovered to date from vertical production wells.
At Bulwark, the Company completed a four well program in July targeting
the Viking light oil pool with production from the new wells on stream in late
July. This successful program is a continuation of the first quarter drilling
program and there is ongoing development drilling planned for the area.
At Richdale, the Company finished a two well drilling program in early
September casing both wells as potential oil wells. Both are slated for
completion and testing in early October with tie in work to follow.
Twin Butte remains in an enviable position possessing a significant
inventory of both low risk and high impact drilling opportunities along with
the ability to shift focus from gas to oil weighted prospects as commodity
Twin Butte's management continues to position the Company both
operationally and financially with excellent growth potential for 2009 and
beyond. The Company has a solid reserve and production base, a strong balance
sheet and a significant tax pool advantage. This combination will enable Twin
Butte to effectively pursue management's growth strategy.
Certain information regarding Twin Butte set forth in this news release
including management's assessment of the Company's future plans and
operations, the effect on the Company and on shareholders of Twin Butte,
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 Twin Butte's 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 and
uncertainty related to the effect of the Arrangement. Twin Butte's 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 Twin Butte will derive therefrom. Additional information on
these and other factors that could affect Twin Butte's results are included in
reports on file with Canadian securities regulatory authorities and may be
accessed through the SEDAR website (www.sedar.com), or Twin Butte's website
(www.twinbutteenergy.com). Furthermore, the forward-looking statements
contained in this joint news release are made as at the date of this joint
news release and Twin Butte does not 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.
In this news release, reserves and production data are commonly stated in
barrels of oil equivalent ("BOE") using a six to one conversion ratio when
converting thousands of cubic feet of natural gas ("Mcf") to barrels of oil
("bbl") and a one to one conversion ratio for natural gas liquids ("NGLs" or
"ngls"). Such conversion may be misleading, particularly if used in isolation.
A BOE conversion ratio of 6 Mcf: 1 bbl is based on energy equivalency
conversion method primarily applicable at the burner tip and does not
represent a value equivalency at the wellhead.
The TSX does not accept responsibility for the adequacy or accuracy of
this news release.
For further information:
For further information: Twin Butte Energy Ltd., 600, 334 - 8th Avenue
S.W., Calgary, Alberta, T2P 2Z2; Ron Cawston, President and Chief Executive
Officer, (403) 215-2040 or R. Alan Steele, Vice President Finance and Chief
Financial Officer, (403) 215-2692, www.twinbutteenergy.com