CALGARY, Jan. 30 /CNW/ - Twin Butte Energy Ltd. (TBE - TSX) (Twin Butte
or the Company) is pleased to provide an operational update and initial 2007
Late Q4 of 2006 and early Q1 2007 have been very active for Twin Butte
with nine wells drilled since the beginning of December in our Jayar and Oyen
core areas and one exploration well drilled at Boundary Lake.
Current production is approximately 1350 boe/d representing a 29%
increase from the estimated Q4 production of approximately 1050 boe/d, with
four additional wells at Jayar and four additional Oyen wells still to be tied
in. As anticipated, production from the Q4 drilling program did not impact the
fourth quarter production numbers with production from the first Jayar well
commencing on January 16, 2007. Production from subsequent wells will be
coming on stream sequentially throughout Q1 2007.
In the Jayar core area the Company has drilled and cased five operated
wells at 85.5% WI and all wells have met or exceeded initial expectations. The
first well is on production and completion and tie in operations are currently
underway on the last four wells. The second stage of our two-stage facility
expansion will be completed by late February increasing the plant capacity to
5 MMcf/d, at which time all wells will be on stream and optimized. Net
stabilized rates to Twin Butte from the new wells are expected to be in the
65 boe/d per well range with historical wells exhibiting long reserve life
As a result of recent drilling at Jayar the Alberta Energy and Utilities
Board (EUB) has expanded the regulatory pool boundaries resulting in an
increase in its original oil in-place (OOIP) of 73% to over 37.5 million
barrels with a pool recovery to-date of approximately 4.7% of OOIP.
Correspondingly, the EUB original gas in-place has increased by 70% to 40 Bcf,
with cumulative production to-date of approximately 14 Bcf. Based on the
drilling results Twin Butte intends to proceed with a downspacing application
to increase well density to two wells per quarter section, from the current
one well per quarter section. Downspacing could provide the Company with over
20 low-risk drilling locations and have a material impact of the Company's net
In the Oyen core area the Company has drilled and cased four 100% WI gas
wells. All wells have now been completed and tie-in operations are underway
with on-stream production rates anticipated to be approximately 250 Mcf/d
(40 boe/d) per well. Production from the first well is expected to commence in
early February and all tie-in and compression optimization work should be
completed by late February. Additionally, the three wells completed at the end
of the 3rd quarter 2006 (two drills and one recompletion) were brought on
production in late November and December as planned. Twin Butte has an
inventory of over 15 potential locations in Oyen and it continues to be an
area of focus for the Company.
At Boundary Lake the Company has cased a Devonian exploratory well with
two potential production zones. A completion program is being prepared and
field operations are expected to commence in February.
The Board of Directors has approved an initial 2007 capital budget of
$16 million which will include the drilling of 10 wells in addition to
completion of the first quarter work summarized above. Cash flow is expected
to be between $12.5 -13.0 million ($0.13/share), based on average production
of 1,575 boe/d, an average gas price of $6.17/GJ AECO, and an oil price of
US $55.00 WTI. The production mix is expected to remain at approximately 70%
natural gas and 30% oil and liquids. Additionally, with excess of $25mm of
capital project inventory the Company is positioned to expand its capital
program should conditions dictate.
The Company has also entered into several fixed price swap hedge
arrangements on a total of 3,500 GJ/d for the period of April 1 to October 31,
2007 at an average price of $6.99/GJ.
The Board of Directors would also like to advise that Alan Steele (VP
Finance & CFO) has resigned his position effective February 2nd, 2007. Mr.
Steele is leaving for personal reasons and has advised that "this was one of
the most difficult decisions I have had to make in my business career. I
continue to be a huge supporter of Ron and the team and I believe the
processes being employed to evaluate and exploit opportunities bode well for
the Company's future. With my recent share purchases I will continue to be a
significant shareholder in the Company."
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 has a significant tax pool base in excess of $120mm
that will enable it to aggressively pursue an "acquire and exploit" strategy.
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)