Twin Butte Energy Ltd. Reports Third Quarter 2009 Financial Results

CALGARY, Nov. 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 nine months ended September 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 nine months ended September 30, 2009 and September 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            Nine months ended
                           September 30                 September 30
    -------------------------------------------------------------------------
                          2009       2008   %          2009       2008   %
                                          Change                       Change
    -------------------------------------------------------------------------
    Financial
     ($ thousands, except
     per share amounts)
    -------------------------------------------------------------------------
      Petroleum and
       natural gas
       sales             8,519     20,235  (58%)     26,275     55,942  (53%)
      Cash flow(1)       2,906      9,895  (71%)      9,917     25,853  (62%)
      Per share basic
       & diluted          0.05       0.23  (78%)       0.20       0.62  (68%)
      Net (loss)
       income           (3,542)     5,909     -     (11,728)     1,405     -
      Per share basic
       & diluted         (0.06)      0.14     -       (0.24)      0.03     -
      Capital
       expenditures      2,042     17,623  (88%)      8,247     33,161  (75%)
      Capital
       dispositions          -          -     -      (9,815)         -     -
      Corporate
       acquisitions     10,625          -     -      10,625     57,252  (81%)
      Net debt(2)       42,114     51,073  (18%)     42,114     51,073  (18%)
    -------------------------------------------------------------------------
    Operating
    -------------------------------------------------------------------------
    Average daily
     production
      Crude oil (bbl
       per day)            682        847  (19%)        688        724   (5%)
      Natural gas (Mcf
       per day)         12,269     13,298   (8%)     12,410     12,409     -
      Natural gas
       liquids (bbl
       per day)            167        139   20%         141        126   12%
      Barrels of oil
       equivalent (boe
       per day, 6:1)     2,894      3,202  (10%)      2,897      2,919   (1%)
    Average sales price
      Crude oil ($ per
       bbl)              67.57     113.51  (40%)      59.06     108.29  (45%)
      Natural gas
       ($ per Mcf)        3.10       8.34  (63%)       3.96       9.21  (57%)
      Natural gas
       liquids ($ per
       bbl)              50.34      92.54  (46%)      46.16      90.76  (49%)
      Barrels of oil
       equivalent ($
       per boe, 6:1)     31.99      68.69  (53%)      33.22      69.95  (53%)
    Operating netback
     ($ per boe)
      Petroleum and
       natural gas
       sales             31.99      68.69  (53%)      33.22      69.95  (53%)
      Realized gain
       (loss) on
       financial
       derivatives        2.92      (3.88)    -        3.89      (5.43)    -
      Royalties          (3.55)    (12.59) (72%)      (3.04)    (11.54) (74%)
      Operating
       expenses         (12.99)    (11.90)   9%      (13.36)    (12.28)   9%
      Transportation
       expenses          (2.41)     (2.45)  (2%)      (2.46)     (2.71)  (9%)
      Operating
       netback           15.96      37.87  (58%)      18.25      37.99  (52%)
    Wells drilled
      Gross                2.0       13.0  (85%)        5.0       20.0  (75%)
      Net                  2.0       13.0  (85%)        5.0       19.9  (75%)
      Success (%)          50%        85%               80%        90%

    -------------------------------------------------------------------------
    Common Shares
    -------------------------------------------------------------------------
    Shares
     outstanding,
     end of period  55,358,393  43,424,425  27%  55,358,393  43,424,425  27%
    Weighted
     average shares
     outstanding
     - basic        54,553,287  43,424,425  26%  49,630,576  41,189,826  20%
    -------------------------------------------------------------------------
    (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 September 30, 2009 excludes financial derivative assets
    less financial derivative liabilities in the amount of ($0.8) million.
    The net amount relates to a net unrealized loss on financial derivatives
    contracts recognized at September 30, 2009.
    

Report to Shareholders

OVERVIEW

Financial and operational performance of the Company in the third quarter continued to demonstrate the disciplined approach we have taken. Focus on operating and G&A controls during a low commodity pricing period has provided positive cash flow growth over the second quarter. We are doing the right things at the right time.

During the third quarter the new Twin Butte Team continued aggressively transforming the Company into a high asset quality early stage resource player. In July we closed the acquisition of Can-Able Energy Ltd. ("Can-Able") which provided an expanded presence in the Deep Basin while adding a drill ready inventory of Cardium and Notikewin locations. In August we announced the acquisition of Buffalo Resources Corp. ("Buffalo"), a significant game changing transaction which not only doubled the production and cash flow base of the Company, but added a number of resource rich assets that offer years of repeatable and scalable drilling opportunities for the Company.

Since both transactions significantly enhanced our drilling inventory, low capital spending of less than cash flow during the quarter ensured our balance sheet was positioned to not only close the deals but to immediately commence executing on our winter 2009/2010 drilling program. Post these two transactions, an asset disposition program was implemented and is designed to reposition our balance sheet. This has been well received by potential purchasers, and we will provide more information on this initiative later this year.

OPERATIONAL REVIEW

The Can-Able assets acquired were primarily at Ansell in the Deep Basin, which offer long reserve life production and a drill ready inventory that the company will soon capitalize on. Our winter program will include a number of liquid rich Cardium drilling locations which at current gas prices of $5.00/GJ and with government drilling and royalty incentives, offer compelling returns. These development locations are the first of a potential fifteen well program which we plan to methodically drill over the next few years. A fourth quarter exploratory vertical dual Wilrich/Notikewin target will potentially set the stage for a number of horizontal delineation wells later in 2010. Our first horizontal Notikewin well offsetting existing vertical production is planned for early in the first quarter. Both of these wells are positioned to further define gas accumulations believed to be in excess of 15 BCF per section over at least 7 contiguous sections.

The Buffalo transaction, which doubles the Company's production base, closed early in the fourth quarter, strengthening our position in a number of core areas but more importantly, added two new scalable resource plays which we have already commenced developing. At Frog Lake, a conventional heavy oil play with significant original oil in place ("OOIP"), we have already drilled 9 successful wells as part of our 30 well winter drilling program with extremely encouraging results to date. This program, in combination with a 15 square km., three dimensional seismic program, planned for early in 2010, will help to expand our knowledge of the long term potential of the Company's current land position. Geological mapping indicates in excess of 350 million barrels of OOIP, with recovery factors currently less than 3 percent. With current oil quality differentials driving over $35.00 per bbl netbacks compared to approximately $7.00 per bbl finding costs, the economics and expandability of the asset are compelling. With a current inventory of over 100 locations at Frog Lake, we anticipate our winter drilling and seismic program to potentially triple this number of locations. The potential for project expansion later in 2010 is predictable. Frog Lake truly represents a significant growing asset for the Company.

A second focus area acquired through the Buffalo transaction is a Viking gas property comprising more than 40 sections of high working interest lands in the Viking area. This resource play is currently gaining momentum with a number of industry players delineating an established resource in the Viking and Colorado Shales with horizontal multistage fracturing technology. This area alone could establish a horizontal program of in excess of 100 wells. With operated underutilized infrastructure in place we have the ability to quickly expand the area's production base with success.

The management team continues to refine, and expand our opportunity inventory, while focusing our operations to areas that can make a difference in future growth and profitability. In excess of 80 percent of our current asset value is in our four core areas. Over time the remaining assets will be divested as we continue to focus the Company in our core growth areas.

OUTLOOK

The new team has been in place for a year. While shareholders may observe a similar share price to a year ago, the Company and underlying asset quality is dramatically improved. Our plan is working but as in most transitions it is ongoing. The confidence of the management team and the Board are compelling.

Twin Butte has emerged post the third quarter and the closing of the Buffalo transaction as a high asset quality Company with significant opportunities for growth. Our organic growth potential, combined with noncore asset sales, will position the Company for our next growth step whether internal or transaction oriented. The team is in place and motivated to produce results. The Company is significantly stronger and more adept at working with changes in the market.

Twin Butte is a value oriented junior producer with a significant repeatable and scalable drilling inventory focused on large OOIP 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 executing a significant capital program generating double digit organic growth. We are committed to continually enhance our asset quality while focusing on per share growth.

The Company plans to communicate guidance in early December with regards to the 2010 budget.

    
    On behalf of the Board of Directors,

    Jim Saunders
    President and Chief Executive Officer

    November 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 nine months ended September 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.
    

SOURCE Twin Butte Energy Ltd.

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

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Twin Butte Energy Ltd.

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