Twin Butte Energy Ltd. Reports First Quarter Financial Results and Confirmation of Bank Line for 2009



    CALGARY, May 13 /CNW/ - Twin Butte Energy Ltd. ("Twin Butte" or the
"Company") (TSX: TBE) is pleased to announce that it has filed its unaudited
financial statements and related management's discussion and analysis ("MD&A")
for the three months ended March 31, 2009 on the Company's website at
www.twinbutteenergy.com and on SEDAR at www.sedar.com. Certain selected
financial and operational information for the three months ended March 31,
2009 and March 31, 2008 comparatives are set out below and should be read in
conjunction with Twin Butte's unaudited financial statements and related MD&A.

    
    Highlights

    -------------------------------------------------------------------------
                                             Three months ended March 31
    -------------------------------------------------------------------------
                                           2009         2008       % Change
    -------------------------------------------------------------------------
    Financial ($ thousands, except
     per share amounts)
    -------------------------------------------------------------------------
      Petroleum and natural gas sales        9,396       13,800         (32)%
      Cash flow(1)                           4,319        5,780         (25)%
        Per share basic & diluted             0.09         0.16         (44)%
      Net loss                              (4,858)      (2,751)        (77%)
        Per share basic & diluted            (0.10)       (0.07)        (43%)
      Capital expenditures                   5,412        8,514         (36%)
      Corporate acquisitions                     -       57,252            -
      Net debt(2)                           51,390       46,297           11%
    -------------------------------------------------------------------------
    Operating
    -------------------------------------------------------------------------
    Average daily production
      Crude oil (bbl per day)                  688          540           27%
      Natural gas (Mcf per day)             12,664       11,096           14%
      Natural gas liquids (bbl per day)        137          110           25%
      Barrels of oil equivalent
       (boe per day, 6:1)                    2,936        2,500           17%
    Average sales price
      Crude oil ($ per bbl)                  46.35        92.17         (50)%
      Natural gas ($ per Mcf)                 5.28         8.37         (37)%
      Natural gas liquids ($ per bbl)        41.40        81.69         (49)%
      Barrels of oil equivalent
       ($ per boe, 6:1)                      35.58        60.67         (41)%
    Operating netback ($ per boe)
      Petroleum and natural gas sales        35.58        60.67         (41)%
      Realized gain (loss) on financial
       derivatives                            7.14        (2.71)           -
      Royalties                              (4.99)      (10.64)        (53)%
    -------------------------------------------------------------------------
      Operating Expenses                    (13.39)      (11.17)          20%
      Transportation Expenses                (2.66)       (2.83)         (6)%
      Operating netback                      21.68        33.32         (35)%
    Wells drilled
      Gross                                    3.0          5.0         (40)%
      Net                                      3.0          5.0         (40)%
      Success (%)                              100%         100%

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    Common Shares
    -------------------------------------------------------------------------
    Shares outstanding, end of period   47,128,425   43,415,425            9%
    Weighted average shares
     outstanding - diluted              47,128,425   36,702,699           28%
    -------------------------------------------------------------------------
    (1) Cash flow means earnings before future taxes, depletion, depreciation
        and accretion, stock based compensation, and unrealized gain (loss)
        on financial derivatives. See Management's Discussion & Analysis Non-
        GAAP Measures.
    (2) Net debt at March 31, 2009 excludes financial derivative assets less
        financial derivative liability in the amount of $0.1 million. The net
        amount relates to a net unrealized gain on financial derivatives
        recognized at March 31, 2009.
    

    Report to Shareholders

    Overview

    The first quarter of 2009 proved to be challenging, with the continued
decline in natural gas prices and a general industry slowdown resulting in
lack of investor interest especially in the junior oil and gas sector. Twin
Butte took a disciplined approach focusing on improving overall corporate
strength and efficiencies to ensure we could ride out the downturn while
positioning the organization to take advantage of future growth potential on
our considerable undeveloped land and reserve base when economic conditions
allow.
    The new management team at Twin Butte continues to refocus the Company in
core areas that have the potential to be significant growth platforms. The
migration to more of a northwest Alberta, northeast British Columbia player is
ongoing. As well our substantial oil based inventory of over 35 locations has
a renewed interest with current Alberta royalty incentives and reasonably
stable pricing driving robust economics. This is a good complement to our over
70 gas based inventory locations. Twin Butte is fortunate in that it has the
flexibility to re-allocate capital between its numerous opportunities
depending on economic conditions.
    We are pleased to announce that we have recently reconfirmed our bank
line at $65 million for 2009. This confirmation ensures continued financial
flexibility with $13.6 million of unused bank line, with net debt of $51.4
million and a planned capital expenditure program in 2009 that will equal cash
flow.

    Operational Review

    The Company continued to restrict capital spending in the first quarter
by limiting the capital program to $5.4 million and continued to focus on
overall corporate cash cost reduction. A three gross (3.0 net) well program
including two exploratory wells resulting in three gas wells was completed in
the first quarter.
    At Oak in northeast British Columbia, we drilled two gross (2.0 net)
successful gas wells, which was driven by a competitors offset drainage. One
of these wells encountered a successful exploratory gas zone. As well,
infrastructure was constructed enabling production startup late in the
quarter. The Company added 150 boe/d of deliverability through pool
delineation which will lead to a number of downspaced drilling locations to
pursue, as gas prices improve.
    At Bulwark, in Eastern Alberta, an exploratory gas discovery was brought
on stream during the first quarter. With recent Alberta royalty incentives the
low net cost (net of $200 per meter credit) of such targets will lead Twin
Butte to drill at least two additional wells in the region over the remainder
of 2009.
    Additional capital projects focused on conservation of solution gas and
operating cost optimization through rental equipment returns. Considerable
effort has been directed to the reduction of operating costs with the
restructuring of our field operations. Although Q1 is normally the highest
operating cost quarter because of weather issues, we saw positive results from
our efforts with unit operating costs dropping below $12 /boe in the month of
March.
    With a forward capital program designed to match cash flow for the second
half of 2009, our program will entail the drilling of an additional 5.5 net
wells. Target locations are at Teal, in British Columbia and Thunder, Highland
and Provost in Alberta. As well, a number of recompletions and workovers are
scheduled in the Jayar and Thunder areas which will enhance deliverability and
reserve recovery. At the end of Q1 the Company had approximately $3.2 million
of remaining flow through obligations for 2009, and we are comfortable that
our planned projects will fulfill this commitment.
    Production for the first quarter averaged 2,936 boe/d, an increase of 17%
from the 2,500 boe/d recorded in Q1 2008 and a modest decrease from the Q4
2008 average of 3,039 boe/d. The inherent low production decline nature of the
Company's assets will allow us to maintain a relatively flat production
profile with low capital spending throughout the remainder of 2009. Planned
processing plant turnarounds in late Q2 and early Q3 will temper corporate
rates by approximately 100 boe/d in each quarter.

    Outlook

    The primary and fundamental driver for Twin Butte in the short term is to
ensure preservation of the Company's considerably undervalued asset base. At
the same time we continue to generate and build upon our capital inventory to
ensure that when economic conditions improve we will have an excess of
opportunities to pursue our long term growth strategy.
    Our view is that summer natural gas prices may test new lows before
starting to gain positive momentum through the fall and early winter. This
foreseeable rally will be driven by sharp decreases in North American
deliverability due to current and forecast low number of wells drilled. The
Company has positioned itself to survive the summer lows, having hedged
approximately 55 percent of our summer volumes at $4.55/mcf; having right
sized G&A for foreseeable levels of spending; working hard to drive our
operating costs lower; and successfully renewing our credit facility at $65
million. Net debt is expected to decrease slightly by the end of the second
quarter from the current level of $51.4 million as we under spend Q2 cash
flow, keeping us well within our bank lines, providing financial flexibility.
Capital spending in the second half of the year will match cash flows,
ensuring no further increase in net debt, and possibly a reduction. In
addition, Twin Butte has nonstrategic assets currently testing the disposition
market which we believe will lead to positive results and further reduce our
net debt.
    The new management team at Twin Butte has made the changes necessary to
reduce costs and refocus the attention to our desired growth areas. With the
reconfirmed support from our bank and plans to further improve our balance
sheet we are very optimistic about the growth we can achieve with the Twin
Butte platform. A multitude of oil and gas opportunities as well as a
significant undeveloped land position, combined with numerous consolidation
opportunities will drive our growth.

    Twin Butte is a value oriented junior gas producer with expanding
operations in NE British Columbia and NW Alberta. With a stable low decline
production base the Company is well positioned to live within cash flow while
continuing to enhance our focus areas. We are committed to growth in 2009
through value added corporate consolidation thereby enhancing the long term
potential growth profile for our shareholders.

    
    On behalf of the Board of Directors,

    Jim Saunders
    President & Chief Executive Officer

    May 13, 2009
    

    For further information regarding Twin Butte Energy Ltd., the reader is
invited to visit the Company's website at www.twinbutteenergy.com.
    Twin Butte Energy Ltd. is a publicly traded Canadian energy company
involved in the exploration, development and production of natural gas and
crude oil in western Canada.
    As referred to above, to view Twin Butte's unaudited financial statements
and related MD&A for the three months ended March 31, 2009 please visit
www.twinbutteenergy.com or www.sedar.com. To the extent investors do not have
access to the internet, copies of the audited financials and related MD&A can
be obtained on request without charge by contacting Investor Relations at
(403) 215-2045 or at 600, 324 - 8th Avenue SW, Calgary, Alberta, T2P 2Z2.

    Reader Advisory

    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 there from. 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.
    

    %SEDAR: 00001562E




For further information:

For further information: Jim Saunders, President and Chief Executive
Officer, Telephone: (403) 215-2040, Fax: (403) 215-2055 or R. Alan Steele,
Vice President Finance and Chief Financial Officer, Telephone: (403) 215-2692,
Fax: (403) 215-2055, www.twinbutteenergy.com

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Twin Butte Energy Ltd.

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