Press release from CNW Group
/C O R R E C T I O N from source -- Twin Butte Energy Ltd./
Tuesday, November 09, 2010
In c2625 transmitted at 17:03e today, an error occurred in the financial table. In row "Per share basic & diluted", column "Nine months ended September 30 2009", the figure "0.24" should have read "(0.24)". Corrected copy follows:
Twin Butte Energy Ltd. Reports Third Quarter 2010 Financial Results
CALGARY, Nov. 9 /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 months ended September 30, 2010 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 months ended September 30, 2010 and September 30, 2009 comparatives are set out below and should be read in conjunction with Twin Butte's unaudited financial statements and related MD&A.
Twin Butte Energy Ltd. ("Twin Butte" or the "Company") (TSX: TBE) is pleased to announce its financial and operational results for the three and nine months ended September 30, 2010.
|Three months ended September 30||Nine months ended September 30|
|2010||2009||% Change||2010||2009||% Change|
|Financial ($ thousands, except per share amounts)|
|Petroleum and natural gas sales||23,382||8,519||174%||72,765||26,275||177%|
|Funds flow (1)||10,069||2,906||246%||28,055||9,917||183%|
|Per share basic & diluted||0.08||0.05||60%||0.22||0.20||10%|
|Per share basic & diluted||(0.01)||(0.06)||-83%||0.00||(0.24)||100%|
|Net debt (2)||76,238||42,114||81%||76,238||42,114||81%|
|Average daily production|
|Crude oil (bbl per day)||2,575||682||278%||2,382||688||246%|
|Natural gas (Mcf per day)||21,972||12,269||79%||22,352||12,410||80%|
|Natural gas liquids (bbl per day)||244||167||46%||264||141||87%|
|Barrels of oil equivalent (boe per day, 6:1)||6,481||2,894||124%||6,372||2,897||120%|
|Average sales price|
|Crude oil ($ per bbl)||61.04||67.57||-10%||63.13||59.06||7%|
|Natural gas ($ per Mcf)||3.73||3.10||20%||4.41||3.96||11%|
|Natural gas liquids ($ per bbl)||61.57||50.34||22%||66.45||46.16||44%|
|Barrels of oil equivalent ($ per boe, 6:1)||39.21||31.99||23%||41.83||33.22||26%|
|Operating netback ($ per boe) (3)|
|Petroleum and natural gas sales||39.21||31.99||23%||41.83||33.22||26%|
|Realized gain on financial derivatives||3.18||2.92||9%||2.11||3.89||-46%|
|Shares outstanding, end of period||128,184,335||55,358,393||132%||128,184,335||55,358,393||132%|
|Weighted average shares outstanding - diluted||128,184,335||54,553,287||135%||127,206,180||49,630,576||156%|
(1) Funds flow means cash flow from operating activities before changes in
non-cash working capital and expenditures on asset retirement
obligations. See Management's Discussion & Analysis Non-GAAP Measures.
(2) Net debt is defined as the sum of working capital deficiency and other liabilities excluding financial derivative assets or liabilities. Net debt is a Non-GAAP Measure.
(3) Operating netback is a Non-GAAP Measure and is the net of revenue, realized gain on financial derivatives, royalties, operating and transportation expenses.
Report to Shareholders
Active Third Quarter Program leads to Fourth Quarter Liquid Production Gains.
Twin Butte executed upon another active capital program in the third quarter, drilling 23 gross (13.6 net) wells while expending approximately $11.8 million net of dispositions. Overall drilling success rate was 93 percent, further demonstrating the repeatability of our significant drilling inventory and our growing operational momentum. Funds flow for the quarter was strong, setting a record level of $10.1 million.
Twin Butte continues to maintain a strong balance sheet with net debt at the end of the quarter of $76.2 million. The Company has recently received reconfirmation of our $120 million credit facility providing ample capital to meet and exceed our internal growth targets while preserving significant financial flexibility should unique capital opportunities arise. To maintain this flexibility in light of continuing weak natural gas prices and the short term widening of light/heavy oil differentials the Company has slightly reduced its Q4 capital program to more closely match anticipated cash flow. This reduced spending will still allow corporate exit targets to be met while ensuring net debt at year end remains below $80 million providing $40 million in excess credit capacity.
Although weather related difficult operating conditions prevailed over most of the quarter the Company accomplished the majority of its planned drilling program. Completion activity on wells drilled in the third quarter, especially at Frog Lake, were delayed into the fourth quarter creating longer on-stream time challenges. As a result of this and an unplanned pipeline repair at our Pincher Creek property which caused approximately 300 boe per day to be shut in for most of August (approximately 100 boe per day for the quarter), third quarter production averaged 6,481 boe per day, essentially flat with the second quarter. Corporate production grew to and averaged 6,867 boe per day in September and liquid content continued to rise to 44 percent of total production for that month.
Current production is approximately 7,000 boe per day (48 percent liquids) which puts the Company on track to meet its forecast exit rate of 7,200 boe per day and positions Twin Butte for continued growth in 2011. Consistent predictable results from our capital plan, has allowed Twin Butte's production to grow even though over 460 boe per day of production has been sold since the Buffalo acquisition to strengthen our balance sheet. With continued success at our Frog Lake heavy oil, Bruce light oil, and Princess medium oil plays and over 90 percent of the 2011 capital plan focused on oil based activities, liquid production weighting will grow to in excess of 60 percent by the end of 2011.
At Frog Lake in the Eastern Plains of Alberta, the Company completed a 17 gross (8.5 net) oil well drilling program in the third quarter and has recently completed a 24 gross (12 net) oil well program in the fourth quarter both at a 100 percent success rate. The Company also drilled a water disposal well in the third quarter which when it commences service late in the fourth quarter will aid keeping our area costs below industry standards. With only 10 of the fourth quarter wells completed to date, Company production from Frog Lake has grown to over 2,300 boe per day, up from 1,100 boe per day when Twin Butte acquired the property approximately a year ago.
A second Frog Lake 3D seismic survey will be complete in the next few weeks which in combination with our first quarter 3D program will cover the majority of the company's lands. These surveys will not only fine tune our extensive development drilling inventory but will further define potential on our undrilled exploratory acreage. We anticipate drilling a minimum of 80 gross (40 net) wells on the property in 2011. Twin Butte anticipates its current drilling inventory will allow continued profitable production growth for years to come.
At Bruce in the Eastern Plains an additional two, 100 percent interest horizontal oil wells, were drilled in the third quarter with an additional well cased awaiting completion in the fourth quarter, bringing our area total to six year to date. These wells continued to delineate a fourth quarter 2009 oil discovery. To handle increased solution gas volumes from the property, Twin Butte has completed construction of a gas plant in early September which has allowed production from the property to be optimized while allowing room for continued production growth in 2011. Based on 3D seismic coverage and anticipated results of a reservoir simulation study currently under way, the Company expects to drill two wells per quarter and to implement a water injection scheme during 2011 to enhance recovery.
At Princess in the Eastern Plains, production has recently commenced at approximately 150 boe per day on our first horizontal Pekisko oil well (100 percent) which was drilled in the third quarter. Based on this success and interpretation of Company owned 3D seismic, a number of follow up wells are planned for 2011.
In the Ansell area of the Deep Basin of Alberta, production has recently stabilized at 150 boe/d (40 percent NGL's) after 60 days of production from our first horizontal multistage fracture treated well. This third-quarter drilled well (with 64 percent working interest) targeted liquids rich Cardium gas and has de-risked the play on our lands where we currently have an inventory of 13 gross (6.5 net) additional locations. The Company has a number of other horizontal gas opportunities (Notikewin and Wilrich) in the area which will be developed when gas pricing dictates.
Twin Butte is in an enviable position of having a significant inventory of oil drilling locations allowing us to maximize return and minimize payout times on oil projects. We anticipate the majority of our 2011 capital program of approximately $50 million will be oil based. As noted this will increase our liquid weighting by over 20 percent in 2011 to over 60 percent. With a reserve life index in excess of 15 years on our natural gas we are confident our low decline natural gas production; reserves; and drilling inventory will survive the anticipated protracted low natural gas price cycle providing significant investor optionality to our investors.
Our new strategy and corporate direction was set in 2009. We have been and will remain disciplined in pursuing this strategy. We continue to do what we said we would do. This has led to a financially stronger company which continues to demonstrate its growth potential. Our organic exploration and development program continues to work. We have and will continue to establish a number of scalable play types in core areas that have and will make a meaningful difference to future corporate growth.
Our strategy is working and will continue to unfold in 2011.
Twin Butte is a value-oriented junior producer with a significant 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.
On behalf of the Board of Directors,
President and Chief Executive Officer
November 9, 2010
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 months ended June 30, 2010 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 410, 396 - 11th Avenue SW, Calgary, Alberta, T2R 0C5.
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, and ability to access sufficient capital from internal and external sources. 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.
For further information:
Jim Saunders, President and Chief Executive Officer
Telephone: (403) 215-2040
Fax: (403) 215-2055
R. Alan Steele, Vice President Finance and Chief Financial Officer
Telephone: (403) 215-2692
Fax: (403) 215-2055