/NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES/
CALGARY, June 25 /CNW/ - TWIN BUTTE ENERGY LTD. TBE-TSX (Twin Butte or
the Company) is pleased to announce that it has signed a definitive purchase
and sale agreement with a third party to acquire producing assets, undeveloped
land, and infrastructure in the Leaman/Thunder area of West Central Alberta
for $28.2 million after standard closing adjustments. The Company anticipates
the acquisition will be accretive on a per share basis to net asset value,
reserves, production and cash flow.
The assets consist of approximately 600 boe/d (90% natural gas) of
stable, high working interest production and approximately 19,300 net acres of
undeveloped land. GLJ Petroleum Consultants Ltd. has independently evaluated
the acquired reserves at 1,382 Mboe proven and 2,042 Mboe proved plus
probable, giving an asset reserve life of 9.3 years and favourable acquisition
metrics at $42,175/boe/d, $18.31/boe proved and $12.39/boe proved plus
probable (net of land value).
Under the terms of the agreement certain lands with no associated
production or reserves are subject to a right of first refusal (ROFR) to a
third party, which will expire before the expected closing date of the
transaction which is June 29, 2007. If exercised, the ROFR would reduce the
purchase price of the assets significantly but have no effect on the
production or reserves acquired. The remaining assets would continue to offer
shareholders an accretive production and infrastructure-based transaction with
optimization and exploitation opportunities, and significant offsetting crown
lands for future growth potential.
The acquisition represents a new core area where Company personnel have
significant technical experience. The properties are 87% operated and include
an operated 9.8 MMcf/d gas processing facility as well as ownership in
considerable pipeline and compression infrastructure which generates
significant annual third party processing revenue. The assets have been
under-capitalized leaving multiple drilling, exploitation and facility
optimization opportunities from multi-zone, high-impact targets at relatively
shallow depths of approximately 1,500 metres. Additionally, the assets are
situated in the Corbett Mannville CBM play area presenting additional upside
to the Company via non-conventional production and third party processing
In connection with the acquisition, Twin Butte has entered into an
agreement for a bought deal private placement of 6 million common shares at a
price of $3.00 per share, for total gross proceeds of $18,000,000 (the
"Financing") with a syndicate of underwriters led by Canaccord Capital
Corporation and including Blackmont Capital Inc., Peters & Co. Limited,
Tristone Capital Inc., and National Bank Financial Inc. The Financing is
conditional on closing the acquisition no later than July 4, 2007 as well as
being subject to customary regulatory and stock exchange approvals and is
expected to close on or about July 17, 2007.
The Board of Directors approved an initial 2007 capital budget of
$16 million, which includes the drilling of seven wells in Q3 and Q4 in
addition to Q1 and Q2 work completed to date. Including the completion of the
subject asset acquisition, the Company anticipates capital spending of $45 to
$50 million in 2007 resulting in an estimated year end exit production rate in
excess of 2,100 boe/d.
Twin Butte is an aggressive, growth-oriented junior oil and natural gas
company, with common shares trading on the Toronto Stock Exchange under the
symbol "TBE". The Company will continue to seek out strategic acquisition
opportunities that will enhance shareholder value and utilize the Company's
tax pool base. The Company has a significant tax pool base in excess of
$130 million that will enable it to aggressively pursue an "acquire and
exploit" strategy and will continue to present a significant advantage to the
Company relative to its peers in the foreseeable future.
Certain information regarding the Company contained herein may constitute
forward-looking statements within the meaning of applicable securities laws.
Forward-looking statements may include estimates, plans, anticipations,
expectations, intentions, opinions, forecasts, projections, guidance or other
similar statements that are not statements of fact. Although the Company
believes that the expectations reflected in such forward-looking statements
are reasonable, it can give no assurance that such expectations will prove to
be correct. These statements are subject to certain risks and uncertainties
and may be based on assumptions that could cause actual results to differ
materially from those anticipated or implied in the forward-looking
statements. The Company's forward-looking statements are expressly qualified
in their entirety by this cautionary statement.
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: Ron Cawston, President and C.E.O., (403)