The Globe and Mail

Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Press release from CNW Group


Thursday, November 25, 2010

TWIN BUTTE ENERGY LTD ANNOUNCES STRATEGIC OIL ACQUISITION AND ENHANCED GUIDANCE FOR 201119:22 EST Thursday, November 25, 2010CALGARY, Nov. 25 /CNW/ - Twin Butte Energy Ltd. (TSX: TBE) ("Twin Butte" or the "Company") is pleased to announce that it has entered into a definitive agreement to purchase conventional heavy oil producing assets primarily in the Frog Lake area of North Eastern Alberta. The assets which include wells and associated production facilities are currently producing approximately 500 bbls per day of oil. The purchase price net of standard closing adjustments is $19.5 million and it is anticipated that the acquisition will close before the end of November.The acquisition includes 10.2 gross (10.1 net) sections of crown land and operated production in the Frog Lake area directly adjacent to Twin Butte's existing Frog Lake operations. These lands are entirely covered with 3 dimensional seismic which is included with the acquisition. Twin Butte has identified numerous recompletion opportunities and a minimum of 50 drillable locations on the lands. Twin Butte's estimates proven and probable reserves associated with the acquisition are 1.4 million boe's based on internal evaluation as at October 1, 2010.Twin Butte intends to finance the acquisition from its existing corporate credit facility which post closing the transaction is anticipated to be increased from its current $120 million to $128 million. Year end 2010 net debt pro-forma the acquisition is anticipated to be approximately $96 million.The acquisition is consistent with Twin Butte's growth strategy as it expands a repeatable play type at Frog Lake where Twin Butte has demonstrated considerable success over the past year having grown production from 1,100 boe per day to currently in excess of 2,600 boe per day through development drilling. Acquired fluid handling and water disposal infrastructure will aid Twin Buttes ongoing cost reduction strategy at Frog Lake.Pro-forma the acquisition, Twin Butte anticipates 2011 average corporate production of 8,000 boe per day with a 2011 exit rate of 8,500 boe per day. It is anticipated that corporate oil and natural gas liquids will continue to increase as a percentage of production from its current 55 percent to 64 percent by the end of 2011. Based on $US80 per bbl WTI and a $3.50 AECO gas price, cash flow is estimated to hit a record $55 million for 2011, providing the financial flexibility to complete a planned capital program of $55 million. It is anticipated that 2011 year end net debt will be approximately $96 million representing 1.5 times Q4 2011 annualized cash flow. Twin Butte plans to drill 100 gross (60 net) wells in 2011 with an emphasis at Frog Lake where approximately 90 gross (50 net) wells are planned.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. For further information regarding Twin Butte Energy Ltd., the reader is invited to visit the Company's website at 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. Reader AdvisoryCertain 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 (, or Twin Butte's website (  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.%SEDAR: 00001562EFor further information: Jim Saunders  Alan SteelePresident 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: