Twin Butte Energy Ltd. Announces Record Production and Cashflow for the three and six months ended June 30, 2008

    CALGARY, Aug. 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 and six months ended June 30, 2008 on the Company's website at and on SEDAR at Certain selected
financial and operational information for the three and six months ended June
30, 2008 and June 30, 2007 comparatives are set out below and should be read
in conjunction with Twin Butte's unaudited financial statements and related


    Twin Butte Energy Ltd. ("Twin Butte" or the "Company") (TSX: TBE) is
pleased to announce its financial and operational results for the three and
six months ended June 30, 2008. Twin Butte's results for the six month period
ended June 30, 2008 includes 144 days of operating results from the
acquisition of E4 Energy Inc. ("E4" or "E4 Energy") which closed February 7,

                    Three months ended June 30      Six months ended June 30
                                            %                              %
                      2008        2007 Change        2008        2007 Change
     ($ thousands,
     except per
     share amounts)
       sales        21,907       6,755   224%      35,707      12,736   180%
      Cash flow(1)  10,178       3,091   229%      15,957       5,716   179%
        Per share
         basic &
         diluted      0.23        0.14    64%        0.50        0.27    85%
      Net (loss)
       income       (1,753)      3,483             (4,503)       (432)
        Per share
         basic &
         diluted     (0.04)       0.16              (0.14)      (0.02)
       (net of
       tions)        7,025      31,981  (78)%      15,538      40,373  (62)%
       tions(2)          -           -             57,252           -
      Net debt(3)   43,230      38,042    14%      43,230      38,042    14%

    Average daily
      Crude oil
       (bbl per
       day)            785         327   140%         663         316   110%
      Natural gas
       (Mcf per
       day)         12,823       6,347   102%      11,960       6,035    98%
       gas liquids
       (bbl per
       day)            129          60   115%         119          56   113%
      Barrels of
       (boe per
       day, 6:1)     3,051       1,445   111%       2,775       1,377   102%
    Average sales
      Crude oil
       ($ per
       bbl)         113.71       70.12    62%      104.92       67.12    56%
      Natural gas
       ($ per Mcf)   10.85        7.46    45%        9.70        7.59    28%
      Natural gas
       liquids ($
       per bbl)      96.55       65.20    48%       89.71       59.87    50%
      Barrels of
       ($ per boe,
       6:1)          78.91       51.38    54%       70.69       51.08    38%
     ($ per boe)
       and natural
       gas sales     78.91       51.38    54%       70.69       51.08    38%
       gain on
       instruments   (9.30)       0.93              (6.33)       0.49
      Royalties     (11.15)     (10.52)    6%      (10.92)     (10.06)    9%
       Expenses     (13.58)     (10.96)   24%      (12.50)     (11.33)   10%
       Expenses      (2.88)      (2.31)   25%       (2.86)      (2.49)   15%
       netback       42.00       28.52    47%       38.08       27.69    38%
    Wells drilled
      Gross            2.0         5.0  (60)%         7.0         9.0  (22)%
      Net              1.9         4.4  (57)%         6.9         7.5   (8)%
      Success (%)     100%        100%               100%        100%

    Common Shares
     end of
     period     43,424,425  22,202,398    96%  43,424,425  22,202,398    96%
     standing   43,417,898  22,202,398    96%  32,228,785  21,280,636    51%

    (1) Cash flow means earnings before future taxes, depletion, depreciation
        and accretion, stock based compensation, and unrealized loss (gain)
        on financial derivative contracts. See Management's Discussion &
        Analysis Non-GAAP Measures.

    (2) Corporate acquisitions represent total consideration for the
        transactions including net working capital deficiency assumed.

    (3) Net debt at June 30, 2008 excludes financial derivative contracts
        asset and liability in the net amount of $8.0 million (June 30, 2007
        - $0.1 million). The net liability relates to an unrealized loss on
        financial derivative contracts recognized at the period end.

    Report to Shareholders

    During the second quarter of 2008 Twin Butte set new record production
and cash flow benchmarks for the Company. As well we have initiated what will
be our busiest quarter ever, having commenced drilling operations in Bulwark,
Thunder and at Brassey where our first Montney horizontal well was spud on the
first of two high impact resource play farm-in agreements.
    The Company realized record cash flow from operations of $10.2 million
for a 229 percent increase compared to the same period in 2007 benefiting from
a 111 percent increase in production volumes and a recovery in commodity
prices during the quarter. The solid financial health of the Company enabled a
significant increase of 67 percent to the annual capital budget during the
second quarter setting up an exciting third quarter that will be the most
active in the Company's history, a quarter that will test opportunities with
the potential to materially change the Company.
    During Q2 the Company continued to execute its strategic growth and
development plan with highlights as follows:

    -   Increased average Q2 production by 111 percent to 3,051 boe/d, up
        from 1,445 boe/d in Q2 of 2007;

    -   Increased production per share by 8 percent over Q2 2007;

    -   Increased cash flow by 229 percent over Q2 2007 to $10.2 million;

    -   Increased cash flow per share by 64 percent to $0.23 per share over
        Q2 2007;

    -   Increased NAV per share to $5.39 using July 1 McDaniel's price deck;

    -   Drilled and cased 2 gross (1.85 net) wells with a 100 percent success

    -   Commenced planning for two additional horizontal wells at the Provost
        Dina oil pool as part of a potential 10 well program which will be
        spud in August;

    -   Commenced planning for the second multi frac horizontal well in Jayar
        light oil pool;

    -   Commenced planning for the multi well drilling program in the Oak and
        Lagarde areas of North East British Columbia;

    -   Completed the vertical strat test and commenced drilling the
        horizontal leg at Brassey on the first Montney - Doig resource play
        farm-in with an estimated 256 BCF OGIP; and

    -   Signed a second farm-in in North East British Columbia to earn an
        additional 11 sections prospective for the Montney resource play and
        the prolific Doig formation directly offsetting an 8 mmcf/d Doig

    Operational Review

    During the quarter the management of Twin Butte continued to execute the
Company's "acquire, exploit and explore" business model adding to our
opportunity base with a second Montney resource play farm-in on an 11 section
block at Kelly in North East British Columbia. The Company now has two
exciting resource play opportunities in addition to the ongoing development
program and Twin Butte continues to benefit from the countercyclical
acquisitions completed over the last year realizing significantly increased
cash flow from its operational success. The increased cash flow has allowed
the Company to safely pursue high impact exploratory opportunities in addition
to lower risk exploitation opportunities representing moderate risk with
significant upside for our shareholders.
    Twin Butte continues to grow its land base which now stands at over
141,000 net undeveloped acres not including the 15 gross sections of Montney
farm-in lands. The Company continues to fully exploit its existing land base
and to evaluate additional farm-in, exploration and acquisition opportunities.
    The Board of Directors approved an increase in the capital budget during
the quarter from $27 million to $45 million which sets up an extremely active
drilling program for the second half of the year that will have the Company
drilling 29 gross (28.3 net) wells in 2008. Upcoming drilling will target
prospects ranging from low risk oil and gas development in SE Alberta,
Thunder, Jayar and North East British Columbia, to our high impact exploratory
earning wells in the Brassey and Kelly areas of North East British Columbia.
Capital is allocated with $38.4 million for drilling and facilities, and
$6.6 million for land, seismic and other that will set up the Company's future

    Production and Drilling

    The Company's second quarter production averaged 3,051 boe/d comprised of
70 percent natural gas and 30 percent light oil and natural gas liquids,
representing an increase of 111 percent over the second quarter 2007 average
of 1,445 boe/d. Production for the quarter was affected by a 22 day major
turnaround at the third party McMahon gas processing facility in North East
British Columbia and by production shut in on a GOR penalty at Boundary Lake
resulting in production downtime. The GOR penalty has been resolved and
Boundary Lake production is now back on stream.
    With the Company's aggressive capital program, which was increased in
June, we continue to be on track to meet exit production guidance of over
3,650 boe per day.
    The Company completed a net capital program of $7.0 million in Q2,
including the drilling and completion of 1 gross (0.85 net) horizontal well in
Jayar and the drilling of 1 gross (1 net) well at Thunder. An additional
Thunder well and 6 additional Plains wells have been drilled to date this
quarter while the Brassey horizontal well which spud in June is currently
drilling on the horizontal section.

    British Columbia

    In North East British Columbia, the Company has been actively preparing
for a multi well drilling program in the greater Fort St John area with
operations commencing on the Brassey Montney resource play near the end of the
second quarter. Brassey is the first of 2 farm-in agreements in North East
British Columbia totaling 15 gross sections of land, highly prospective for
both the Montney and Doig formations. The stratigraphic test of the vertical
section has been completed giving positive log indications, gas shows and
penetration rates. Consequently, the horizontal leg of the well has been
kicked off with drilling anticipated to finish in August and completion
results expected in late September.
    The Brassey area is a 4 section land block where Twin Butte will drill
and case this first horizontal well to earn and continue the P&NG rights in
the entire 4 section block for a 5 year term. Earning will be from the surface
to the base of the Montney formation and Twin Butte will pay 100 percent of
the drilling and casing cost on this initial horizontal well to earn a
60 percent working interest. Twin Butte is the operator and all costs after
casing of the initial well will be shared 60:40. The Brassey lands directly
offset recent land sales where bonus prices of $8.5 million were paid per
section, placing an equivalent land value of $75 million on the 9 net sections
of Twin Butte farm-in land which represents a value of $1.73 per fully diluted
share that is not currently recognized in the Company share trading price or
NAV calculation. Montney pay from area offset wells average 76 m in thickness
with a potential original gas in place (OGIP) reserve estimate of greater than
64 BCF per section for the Montney section alone with out consideration for
the Doig phosphate zone or adsorbed gas which could total up to an additional
40 BCF per section of OGIP. The lands are located approximately 3.0 miles from
a tie in point which combined with the large gas resource and favorable
farm-in terms give the potential for a material impact on the Company.
    The second farm-in is on an 11 section block in the Kelly area that is
also prospective for the Montney and Doig formations and has additional
potential from the Doig phosphate zone and from adsorbed gas in the Montney
formation. The first location offsets an 8 mmcf/d Doig producer and the Doig
zone can be evaluated while drilling the Montney test well. The Company is
committed to drill and complete one vertical test well in late Q3 at
100 percent working interest to earn a 60 percent working interest in the
entire 10 section block. Again, Twin Butte is the operator and all costs after
completion of the initial well will be shared 60:40.
    At Oak-Lagarde the Company plans to commence a 3 well drilling program in
early September. The wells in the program offset existing producing wells and
are considered to be development risk with production anticipated to commence
in the fourth quarter.

    Jayar Area

    At Jayar, the Company initiated planning of its second multifrac
horizontal well targeting the Dunvegan light oil pool. The well has been
scheduled for drilling in the fourth quarter and will be fractured with up to
6 treatments along the length of the horizontal section. The well is targeting
a higher pressure area of the reservoir and will evaluate new fracture
technology to improve post fracture flow back and cleanup of the wellbore.
    The Jayar Dunvegan pool is an 85.5 percent working interest, low
permeability reservoir that had been previously developed utilizing vertical
drilling and completion technology. Production from the initial horizontal
well is encouraging and the project economics remain robust presenting
significant upside potential from this 37.5 mmbbl OOIP light oil reservoir.
Additionally, the Company also believes there is potential for significant
capital efficiencies on future operations and is currently evaluating the
viability of horizontal re-entry work and different fracture treatment fluids
to further improve project economics.

    Thunder Area

    Twin Butte drilled and cased one well in Thunder in Q2 as a potential gas
well and has cased a second well subsequent to quarter end. Both wells have
been completed and are currently awaiting tie in with follow up drilling
planned for Q4 or Q1 of next year.

    Plains Area

    The Company commenced planning for a second horizontal well program at
Provost targeting the Dina RR oil pool. This two well program will commence
operations in August with production additions expected in September. The 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. The new
battery and disposal facility commissioned in March of this year is helping to
reduce trucking costs and allowing well production to be optimized. Excellent
initial results from the Q1 program support continued development with the
potential for up to 10 additional wells on this property.
    At Bulwark, the Company continued its area development in the second
quarter spudding the first 2 wells in a 6 well multi zone program. The primary
target is the Viking light oil pool with all wells scheduled for completion in
the third quarter and production planned to commence in early September. This
ongoing program continues to yield excellent results for the Company.
    At Richdale, the Company will be drilling a two well program in the third
quarter pursuing Mannville light oil targets. These prospects are development
risk keying on bypassed pay opportunities.

    Twin Butte 2008 Guidance is summarized as follows:

    Exit production rate                       (greater than) 3,650 boe/d
    Annualized Q4 cash flow                    $56 million
    Annualized Q4 cash flow per share          $1.27
    Average Gas Price 2008                     $9.04/gj
    Average Oil Price 2008                     $109.00/bbl WTI
    Capital program                            $45 million
    Year end debt                              $48 million
    Authorized bank line                       $65.0 million
    Unused bank line capacity                  $16.5 million
    Shares outstanding (basic)                 43.4 million
    Shares outstanding (fully diluted)         46.7 million

    The Company's key characteristics are illustrated as follows:

    -   Reserves of 9.1 MMboe (P+P);

    -   Stable production base (greater than) 3,100 boe/d;

    -   Net asset value of $ 5.39 per share not including Montney upside,
        (mechanical reserves update, McDaniel's July 1 pricing);

    -   A reserve life index of 8.0 years (P+P);

    -   Tax pools of approximately $197 million;

    -   Net undeveloped land totaling approximately 141,000 acres not
        including 15 section BC farm-ins;

    -   Solid balance sheet with current net debt of approximately
        $43 million excluding unrealized loss on financial derivative
        contracts, and total credit facilities of $65 million;

    -   Year end net debt of approximately 1.0 times annualized Q4 cash flow;

    -   Shares outstanding of 43.4 million (basic) and 46.7 million (fully

    -   Significant oil potential at Jayar and Provost;

    -   Exciting exploration and resource potential in North East British
        Columbia; and

    -   Significant drilling inventory of (greater than) 80 locations.

    In the second quarter we continued to add to our land base and our
inventory of opportunities and the management team and Board of Directors
remained focused on cost effective per share growth in reserves, production
and cash flow following management's "acquire, exploit and explore" business
    Weather and third party facility shut ins delayed activity and production
in Q2 but the Company remains on track with an aggressive capital program and
an excellent inventory of low risk development and high impact resource
prospects in the upcoming quarters. As a result the Company continues to guide
to exit production of greater than 3,650 boe/d which would represent a
74 percent increase over the 2007 exit production rate.
    The capital program is underpinned by the drilling of high impact earning
wells on the large OGIP Montney resource lands in North East British Columbia,
the Jayar light oil pool development and the Provost Dina oil pool development
that all present significant upside potential for the Company. The management
and Board of Directors will continue to monitor the commodity price
environment, the Company's continued success and its growing inventory of
opportunities in relation to the cash flow capital budget.
    Twin Butte's management continues to position the Company both
operationally and financially with excellent growth potential for 2008 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 and we remain very
excited about the Company's future prospects.

    On behalf of the Board of Directors,

    Ron Cawston
    President and C.E.O.
    August 13, 2008

    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 (, or Twin Butte's website
( 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: Ron Cawston, 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,

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