Twin Butte Energy Ltd. Reports Second Quarter 2009 Financial Results



    CALGARY, Aug. 12 /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 and six months ended June 30, 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 and six months ended June
30, 2009 and June 30, 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 June 30     Six months ended June 30
    -------------------------------------------------------------------------
                       2009        2008    %         2009        2008    %
                                         Change                        Change
    -------------------------------------------------------------------------
    Financial
     ($ thousands,
     except per
     share amounts)
    -------------------------------------------------------------------------
      Petroleum
       and natural
       gas sales       8,359      21,907  (62%)     17,756      35,707  (50%)
      Cash flow(1)     2,691      10,178  (74%)      7,011      15,957  (56%)
        Per share
         basic &
         diluted        0.06        0.23  (74%)       0.15        0.50  (70%)
      Net loss        (3,328)     (1,753)  90%      (8,186)     (4,503)  82%
        Per share
         basic &
         diluted       (0.07)      (0.04)  75%       (0.17)      (0.14)  21%
      Capital
       expenditures      793       7,025  (89%)      6,205      15,538  (60%)
      Capital
       dispositions   (9,815)          -     -      (9,815)          -     -
      Corporate
       acquisitions        -           -     -           -      57,252 (100%)
      Net debt(2)     39,889      43,230   (8%)     39,889      43,230   (8%)
    -------------------------------------------------------------------------
    Operating
    -------------------------------------------------------------------------
    Average daily
     production
      Crude oil
       (bbl per day)     696         785  (11%)        692         663    4%
      Natural gas
       (Mcf per day)  12,302      12,823   (4%)     12,482      11,960    4%
      Natural gas
       liquids
       (bbl per day)     118         129   (9%)        127         119    7%
      Barrels of
       oil
       equivalent
       (boe per day,
       6:1)            2,864       3,051   (6%)      2,899       2,775    4%
    Average sales
     price
      Crude oil
       ($ per bbl)     63.04      113.71  (45%)      54.79      104.92  (48%)
      Natural gas
       ($ per Mcf)      3.46       10.85  (68%)       4.38        9.70  (55%)
      Natural gas
       liquids
       ($ per bbl)     45.62       96.55  (53%)      43.36       89.71  (52%)
      Barrels of
       oil
       equivalent
       ($ per boe,
       6:1)            32.07       78.91  (59%)      33.84       70.69  (52%)
    Operating
     netback
     ($ per boe)
      Petroleum and
       natural gas
       sales           32.07       78.91  (59%)      33.84       70.69  (52%)
      Realized
       gain (loss)
       on financial
       derivatives      1.58       (9.30)    -        4.38       (6.33)    -
      Royalties        (0.55)     (11.15) (95%)      (2.78)     (10.92) (75%)
    -------------------------------------------------------------------------
      Operating
       expenses       (13.70)     (13.58)   1%      (13.54)     (12.50)   8%
      Transportation
       expenses        (2.32)      (2.88) (19%)      (2.49)      (2.86) (13%)
      Operating
       netback         17.08       42.00  (59%)      19.41       38.08  (49%)
    Wells drilled
      Gross              0.0         2.0 (100%)        3.0         7.0  (57%)
      Net                0.0         1.9 (100%)        3.0         6.9  (57%)
      Success (%)         -%        100%              100%        100%

    -------------------------------------------------------------------------
    Common Shares
    -------------------------------------------------------------------------
    Shares
     outstanding,
     end of
     period       47,128,425  43,424,425    9%  47,128,425  43,424,425    9%
    Weighted
     average
     shares
     outstanding
     - diluted    47,128,425  43,417,898    9%  47,128,425  32,228,785   46%
    -------------------------------------------------------------------------
    (1) Cash flow means earnings before future taxes, depletion, depreciation
        and accretion, stock based compensation, and unrealized gain (loss)
        on financial derivatives contracts. See Management's Discussion &
        Analysis Non-GAAP Measures.
    (2) Net debt at June 30, 2009 excludes financial derivative assets less
        financial derivative liabilities in the amount of $0.4 million. The
        net amount relates to a net unrealized gain on financial derivatives
        contracts recognized at June 30, 2009.


    Report to Shareholders

    Overview
    

    During the second quarter of 2009 the new management team at Twin Butte
continued to progress our business plan with two strategic transactions. In
early June we closed the disposition of predominantly nonproducing assets in
North East British Columbia for $9.8 million which, combined with the quarters
modest capital program, reduced net debt by $11.5 million or 22 percent to
under $40 million. Late in June we announced the acquisition of Can-Able
Energy Ltd., which subsequently closed in July and has been fully integrated
into our operations. This transaction significantly expanded our Deep Basin
drilling inventory while adding approximately 250 boe/d in the greater Ansell
area of West Central Alberta. Combined with our Jayar focus area we now have
in excess of 30 deep basin drilling opportunities. Post the acquisition we
have an established $72 million credit facility with approximately $29 million
of unutilized capacity.
    We will continue to refocus the Company in core areas with repeatable
play types. Twin Butte's current drilling inventory of over 100 locations
continues to be high graded awaiting a better economic environment to execute.

    Operational Review

    Operationally we again took a disciplined approach in the quarter
focusing on production optimization and operating cost reduction initiatives
while expending $0.8 million on capital projects excluding dispositions or
just under 30 percent of our cash flow. The high quality and low decline
nature of our assets served us well with quarter over quarter production
declining just 2.5% to average 2,864 boe/d. Although operating costs in the
second quarter remained essentially flat with the first quarter at $13.70 per
boe, prior year third party charges amounted to approximately $2.00 per boe in
the quarter which, if excluded, would have dropped our operating costs
approximately 15 percent quarter over quarter. Overall cost reduction remains
a focus for the Company as we diligently work to improve overall corporate
strength and efficiency.
    With a forward capital program designed to match cash flow to ensure
balance sheet flexibility, our spending will remain modest until late in the
year when we believe we will have greater visibility on gas prices. The third
quarter will include exploratory work at Teal in North East British Columbia
where new royalty incentives have recently been announced as well as continued
development of our Provost large Original Oil in Place pool. For the remainder
of 2009 a minor amount of spending will occur in the Eastern Alberta Plains
with the majority of spending being focused on a deep basin rework program at
Jayar and initial Cardium and Notikewin drilling at Ansell. A number of
seismic programs are planned to continue to enhance inventory especially on a
number of horizontal multistage fracture stimulation plays.

    Outlook

    We entered the year with a mandate of value preservation and refocus.
Steps have and continue to be taken to ensure balance sheet flexibility.
Management continues to aggressively pursue this strategy. Uncertainty in both
the commodity and equity markets have forced some business plans to lie
dormant waiting for change. We have taken the opposite approach aggressively
pursuing our goals while being extremely cognizant of the short term realities
we are facing as a business. Our approach is working.
    Our short term view on gas prices remains cautious. However, with North
American drilling for natural gas at all time lows, reductions in
deliverability are inevitable. This combined with slightly more optimistic
longer term demand expectations lead us to believe that gas prices will start
to rebound later this year or in early 2010. Management's strategy, to survive
the low gas price environment through hedging, as well as operating cost and
G&A reductions, while continuing to augment the Company's long term gas
drilling inventory has ensured that the Company is positioned for the rebound.
In addition, the Company has started to shut-in production at higher operating
cost wells to preserve reserves for a higher commodity price environment.
    Growth in production and drilling inventory during low capital spending
environment will come through corporate initiatives. The Can-Able transaction
speaks to this strategy providing growth in our company's production and
reserve base while refocusing the company in areas that can make a difference.
Initiatives such as this combined with noncore asset dispositions will further
focus our operations while maintaining balance sheet flexibility. More of
these initiatives are our priority and we will continue to focus on
opportunities to create value through corporate consolidation.
    Twin Butte is a value oriented junior gas producer with expanding
operations in West Central; North West Alberta; and North Eastern British
Columbia. With a stable low decline production base the company is well
positioned to live within our cash flow while continuing to enhance our long
term focus areas. We are committed to growth in 2009 through value added
corporate consolidation thereby enhancing the long term growth potential for
our shareholders.

    
    On behalf of the Board of Directors,

    Jim Saunders
    President & Chief Executive Officer

    August 12, 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 and six months ended June 30, 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

Organization Profile

Twin Butte Energy Ltd.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890