Press release from CNW Group
TWIN BUTTE ENERGY LTD. CLOSES STRATEGIC OIL ACQUISITION
Thursday, December 02, 2010
CALGARY, Dec. 2 /CNW/ - Twin Butte Energy Ltd. (TSX: TBE) ("Twin Butte" or the "Company") is pleased to announce that the previously announced (November 25, 2010) purchase of conventional heavy oil producing assets primarily in the Frog Lake area of North Eastern Alberta was closed on November 30, 2010. 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 was $19.5 million.
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 has financed the acquisition from its existing corporate credit facility which post closing the transaction has been increased 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 Butte's ongoing cost reduction strategy at Frog Lake.
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, the reader is invited to visit the Company's website at www.twinbutteenergy.com.
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, and future debt 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.
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|