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Press release from CNW Group

Twin Butte Energy Ltd. Reports First Quarter 2011 Financial Results

Wednesday, May 25, 2011

Twin Butte Energy Ltd. Reports First Quarter 2011 Financial Results16:30 EDT Wednesday, May 25, 2011CALGARY, May 25, 2011 /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 March 31, 2011 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 March 31, 2011 are set out below and should be read in conjunction with Twin Butte's unaudited financial statements and related MD&A.HighlightsTwin Butte Energy Ltd. ("Twin Butte" or the "Company") (TSX: TBE) is pleased to announce its financial and operational results for the three months ended March 31, 2011.     Three months ended March 31 20112010    % ChangeFinancial ($ thousands, except per share amounts)   Petroleum and natural gas sales31,72825,50324%Funds flow (1)12,7899,72432%Per share basic & diluted0.100.0825%Net (loss) income(2,262)3,989-157%Per share basic & diluted(0.02)0.03-167%Capital expenditures 17,34711,35253%Capital dispositions(11,500)(5,718)101%Corporate acquisitions- - Net debt (2)80,67795,673-16%Operating   Average daily production   Crude oil (bbl per day)4,0162,07594%Natural gas (Mcf per day)19,92422,670-12%Natural gas liquids (bbl per day)271287-6%Barrels of oil equivalent (boe per day, 6:1)7,6086,14024%Average sales price   Crude oil ($ per bbl)62.4168.58-9%Natural gas ($ per Mcf)4.055.33-24%Natural gas liquids ($ per bbl)77.8870.1111%Barrels of oil equivalent ($ per boe, 6:1)46.3446.140%    Operating netback ($ per boe) (3)   Petroleum and natural gas sales46.3446.140%Realized gain on derivative instruments1.200.48150%    Royalties(8.73)(9.51)-8%Operating expenses(14.73)(13.47)9%Transportation expenses(1.87)(1.77)6%Operating netback22.2121.872%Wells drilled    Gross37.025.048%Net27.514.590%Success (%)96100-4%    Common Shares   Shares outstanding, end of period132,022,950128,114,3353%Weighted average shares outstanding - diluted130,555,111122,800,5086% (1) Funds flow from operations and funds flow from operations netback are non-IFRS measures that represent the total and the average per boe, respectively, of cash provided by operating activities, before adjusting for changes in non-cash working capital items.(2) Net debt is a non-IFRS measure representing the total of bank indebtedness and accounts payables, less accounts receivables, less deposits and prepaids.(3)  Operating netback is a non-IFRS measure calculated as the average per boe of the Company's oil and gas sales, less royalties, operating and transportation expenses.Report to ShareholdersCorporate:The operational momentum Twin Butte established in 2010 continued in the first quarter of 2011. An active capital program of $17.3 million saw 37 gross (27.5 net) wells drilled with a 96 percent success rate. Corporate production grew to 7,608 boe per day (net of dispositions of 175 boe per day),  a 6 percent increase from the fourth quarter of 2010 and liquid weighting increased to a record 56 percent. The Company's ongoing noncore asset disposition program netted $11.5 million on sales of 175 boe per day which when combined with record cash flows and approximately $7.9 million of warrant proceeds maintained a strong balance sheet with net debt at March 31 of $80.7 million. Subsequent to the first quarter an additional $6.7 million of proceeds have been received from the remaining Company warrants that were exercised before the May 9th expiry. The Company's credit facility was recently renewed at $128 million providing continued financial flexibility for future opportunities.The team at Twin Butte has successfully transitioned the Company to a liquid weighted producer with a multiyear, low risk oil drilling inventory, ensuring reserve and production growth for years. Liquid production continues to grow and liquid weighting is now anticipated to be close to 70 percent by the end of the year.Operations:The Company's continued drilling success during the first quarter of 2011 demonstrates the depth and repeatability of the Company's drilling inventory. Twin Butte is in an enviable position in that it has a current inventory of over 400 net oil drilling locations allowing prioritized capital spending to maximize return and minimize payout times. Already in the second quarter an additional 24 gross (13.5 net) wells have been drilled at 100 percent success.  Although all wells from the first quarter program are on-stream, spring breakup conditions have prevented approximately half the second quarter wells from being completed and put on-stream.At Frog Lake in the Eastern Plains of Alberta the Company drilled 35 gross (25.5 net) wells in the first quarter at a 100 percent success rate including the Company's first horizontal heavy oil well. Production from Frog Lake continues to increase recently hitting record production levels of 3,800 boe per day. Post spring breakup, once cased wells are completed, it is anticipated that production will exceed 4,000 boe per day. The Company anticipates this profitable growth to continue for a number of years based on our current sizable drilling inventory of over 320 net locations in this area. In 2011 we anticipate drilling over 140 (92 net) wells in our heavy oil area at and in close proximity to Frog Lake. Our first horizontal well at Frog Lake which has been on production for approximately one month is showing promising results. We anticipate drilling an additional 2 to 3 horizontal wells at Frog Lake over the remainder of 2011 as well as at least 3 horizontal Lloydminster heavy oil wells in a new area south of Frog Lake. With current light to heavy oil differentials considerably narrowed from the first quarter, netbacks exceeding $40 per bbl, recycle ratios greater than 4 times and payouts of less than 10 months are anticipated. With over 900 million barrels of oil in place and a low recovery factor to date of less than two percent, significant recoverable reserve upside potential remains at Frog Lake. Twin Butte has completed preliminary modeling of thermal applications at Frog Lake with results positive enough to warrant additional data acquisition, modeling and costing which will hopefully lead to regulatory work to approve a pilot project for 2012.At Princess, in South Eastern Alberta, the Company executed an agreement with a senior oil and gas producer whereby Twin Butte can earn up to 30 sections of land prospective for Pekisko oil. The lands are directly adjacent to Twin Butte's current Princess operations where Twin Butte drilled its first Pekisko horizontal oil well in the third quarter of 2010. The well is currently producing in excess of 200 bbls of oil per day after being on-stream for nearly seven months. In the first quarter the Company drilled the first of three commitment wells on the farm in as well as an offset to our 2010 discovery. The offset well encountered oil but too high a water cut to currently produce the well economically.  Testing operations on the first earning well were not definitive and will continue post spring breakup. The second commitment well under the farm in agreement is anticipated to be drilled in June.At Bruce, the site of our successful 2010 Lloydminster light oil horizontal program an application has been submitted for approval of a waterflood scheme which is anticipated to commence by the fourth quarter. The waterflood is anticipated to maximize ultimate reserve recovery and stabilize current production declines. A horizontal well on an analogous play will be drilled in the third quarter.Twin Butte has recently closed a small acquisition ($2.3 million) of a medium gravity Sparky oil pool with multiwell development potential. Plans are to commence infill and delineation drilling on the pool in the third quarter. In the same area the company anticipates drilling a minimum of two Viking horizontal oil wells in the third quarter. Based on success of the first wells the play could develop into a late year multiwell development. We anticipate reporting more on this new oil growth area later this year.Outlook:The Company's organic exploration and development program continues to demonstrate potential for continued growth in production and reserves in 2011 and beyond. With over 400 net oil drilling locations Twin Butte believes it can continue the profitable growth in the Company's asset value through the drill bit. Twin Butte has positioned itself in scalable and repeatable play types in core areas that can make a meaningful difference to future corporate growth.Twin Butte is a value oriented emerging intermediate producer with a significant and growing scalable and repeatable 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. The 2011 capital plan is highly focused to two core areas in Alberta while providing the flexibility to quickly be accelerated should economic conditions allow. Twin Butte is committed to continually enhance its asset quality while focusing on per share growth.Jim SaundersPresident and C.E.O.May 25, 2011Financial StatementsThe Company's unaudited financial statements and associated Management's Discussion and Analysis ("MD&A") for the three months ended March 31, 2011 will be available on Twin Butte's website at www.twinbutteenergy.com located within "Investor Info" under "Financial Documents". Additionally, these documents will be filed, in due course, on the System for Electronic Document Analysis and Retrieval ("SEDAR"). These documents can be retrieved electronically from the SEDAR system by accessing Twin Butte's public filings under "Search for Public Company Documents" within the "Search Database" module at 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 - 11 Avenue SW, Calgary, Alberta, T2R 0C5.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.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 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 or R. Alan Steele, Vice President Finance and Chief Financial Officer Telephone:  (403) 215-2692 Fax:             (403) 215-2055 www.twinbutteenergy.com