CALGARY, Jan. 12 /CNW/ - Twin Butte Energy Ltd. (TSX: TBE) ("Twin Butte" or the "Company") is pleased to provide an update on various corporate activities.
During 2010 Twin Butte drilled 88 gross (51.1 net) wells with a 99
percent success rate leading to significant production growth. The
Company averaged over 7,700 boe per day (55 percent liquids) in
December meeting year end exit guidance (7,200 boe per day before Frog
Lake acquisition). This represents 35 percent production growth from
the Company's Q4 2009 average even though 485 boe per day of production
has been sold since then. This production growth was also achieved
while under spending the 2010 base capital plan by an estimated $2
million ($36 vs. $38 million net of dispositions and Frog Lake $19.5
million acquisition) further demonstrating the potential of the
Company's repeatable drilling inventory and its very efficient capital
spending in combination with its equally successful noncore disposition
program. Entering 2011 Twin Butte is well positioned with sizeable
multi-year oil drilling inventory and strong operational momentum.
It is anticipated that this high level of drilling activity and
production growth will continue in 2011 with 110 gross (67.3 net)
moderate risk oil wells planned. Production for 2011 is anticipated to
average 8,000 boe per day (60 percent liquids), up 22 percent from our
2010 average of 6,550 boe per day. Drilling operations are currently
underway at both Frog Lake where 90 gross (50 net) oil wells are
planned and at Princess in Southern Alberta.
At Princess the Company has signed a farmout agreement with a senior oil
and gas producer (farmor) whereby Twin Butte can earn up to 30 sections
of land prospective for Pekisko oil. The lands are directly adjacent to
Twin Butte's current Princess operations where Twin Butte drilled its
first Pekisko horizontal oil well in the third quarter of 2010. The
well has been producing in excess of 165 bbls of oil per day for the
last three months and the Company is currently drilling an offset to
this well. Under the terms of the farmout agreement, Twin Butte has
committed to drill 3 horizontal Pekisko oil wells for which it will
earn 100 percent working interest in the wells until payout, reverting
to a 65 percent interest post payout. For each earning well drilled the
Company will earn a 65 percent interest in the entire section drilled
together with one adjacent section. Following the drilling of the
initial three wells Twin Butte will have the continuing option to drill
additional wells to earn the remaining unearned sections under the same
terms and conditions. Twin Butte will have access to the farmors
substantial area infrastructure to handle produced fluids from the
earned lands which will minimize capitalization of the project for both
The Pekisko play in the Princess area meets the Company's economic
criteria in regard to payout and recycle ratio, consistent with the
Company's other oil opportunities and importantly provides the
scalability Twin Butte had wanted to achieve in the area. The farmout
block is entirely covered with proprietary 3D seismic, which Twin Butte
will earn rights to as part of the agreement. Preliminary technical
work has identified a minimum of 20 horizontal Pekisko oil locations on
the lands. Twin Butte anticipates the first three wells will be drilled
in the first half of 2011.
This transaction demonstrates Twin Butte's ability to diversify and
continue to build upon its already sizable oil drilling inventory
ensuring predicable oil growth for years to come. The Company's sizable
gas inventory will stay in suspense until natural gas prices improve
and dictate comparative economics with Twin Butte oil projects.
Consistent with the Company's ongoing program of noncore asset
dispositions, Twin Butte recently closed (January 1, 2011 effective
date) the sale of an Eastern Plains noncore asset for $10.4 million.
The asset was producing approximately 150 boe per day (50 percent
natural gas) and generated extremely attractive transaction metrics of
$69,300 per flowing boe per day. This compares to the transaction
metrics of our November Frog Lake acquisition which added approximately
500 bbls of oil per day for $19.5 million ($39,000 per flowing boe per
Pro-forma the subject disposition, corporate production is currently
7,550 boe per day (56 percent liquids) and net debt is approximately
$86 million on a proforma credit facility of $128 million, which
remains unchanged. This recent disposition further consolidates Twin
Butte's operations and provides additional financial flexibility to
continue to grow our core operations. Previous production guidance for
2011 of 8,000 and 8,500 boe per day average and exit respectively
remain unchanged as a result of this disposition.
The Company is also pleased to announce the appointment of Mr. Bruce
Hall to the position of Chief Operating Officer. Bruce has been with
Twin Butte for the past 18 months in the role of Senior Vice President
Engineering and has played a key role in the successful growth and
repositioning of the Company.
Twin Butte is a value-oriented junior producer with a significant and
growing repeatable and scalable drilling inventory focused on large
original oil in place and large original gas in place play types. With
a stable low decline production base, the Company is well positioned to
live within cash flow while providing shareholders with sustainable
growth potential over both the short and long term. Twin Butte is
committed to continually enhance its asset quality while focusing on
per share growth.
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.
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 of the acquisition on the Company, production
increases, future debt levels, future cash flows, anticipated drilling
plans 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, and ability to access
sufficient capital from internal and external sources, including, but
not limited to, increasing Twin Butte's credit facility. 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 news
release are made as at the date of this 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.
SOURCE Twin Butte Energy Ltd.
For further information:
|Jim Saunders ||Alan Steele|
|President and Chief Executive Officer ||Vice President, Finance, Chief Financial Officer|
and Corporate Secretary
| || |
|Twin Butte Energy Ltd. || |
|Suite 410, 396 - 11th Avenue S.W. || |
|Calgary, Alberta T2R 0C5 || |
| || |
|Phone: (403) 215-2045 || |
|Fax: (403) 215-2055 || |
|Website: www.twinbutteenergy.com || |