Twin Butte Energy Ltd. Provides Third Quarter Operational Update
CALGARY, Sept. 21 /CNW/ - (TSX: TBE) - Twin Butte Energy Ltd. ("Twin Butte") or (" Company") is pleased to provide an operations update on our third quarter activities. The Company anticipates the third quarter to be one of our most active, further demonstrating our operation momentum. We anticipate a minimum of 25 gross (16 net) wells will be drilled while expending approximately $13 million net of dispositions. To date 21 of these planned wells have been cased with an overall success rate of 95 percent.
At the Frog Lake heavy oil play in the Eastern Plains of Alberta, the Company has recently cased well 14 of a planned 18 gross (9.0 net) well third quarter drilling program bringing our year to date wells drilled to 47. We anticipate drilling an additional 30 gross (15 net) in the fourth quarter bringing our 2010 Frog Lake well count to just over 80. Unseasonable wet weather has delayed our completion operations at Frog Lake with only 4 wells from our third quarter program currently producing. With these behind pipe volumes as well as results from an active ongoing drilling program we anticipate area oil production to grow substantially by year end. Company production from Frog Lake has already increased appreciably to its current 1,950 from 1,100 boe per day when Twin Butte acquired the property late in 2009.
A second Frog Lake 3D seismic survey which was planned for the third quarter has been delayed to the fourth quarter due again to weather issues. These surveys in combination with our active drilling program will not only continue to enhance our extensive development drilling inventory but will further define potential on our undrilled exploratory acreage.
At Bruce in the Eastern Plains an additional two, 100 percent interest horizontal oil wells, were drilled in the third quarter bringing our area total to five year to date. 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 over the past few weeks. Average production from wells drilled to date has exceeded 100 boe per day. Based on 3D seismic coverage the Company expects to drill 2 wells per quarter over the next year.
At Princess in the Eastern Plains we have completed production testing on our first horizontal Pekisko oil well (100 percent) with tie-in operations soon to be underway. We anticipate the well will commence production in early October at approximately 150 bbls of oil per day. Based on this success a number of follow up wells are planned for 2011.
In the Ansell area of the Deep Basin of Alberta, the Company has recently commenced production from our first horizontal multistage fracture treated well at a stabilized rate in excess of 300 boe per day (40% NGL's). This third quarter drilled well (64 percent WI) 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.
Unseasonably wet weather has hampered industry activity across Western Canada. Twin Butte has not been immune to such conditions and although we will accomplish our planned drilling program, some completion and onstream times from our successes have been delayed. 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, third quarter production will be flat with our second quarter average of just under 6,500 boe per day.
Current production is approximately 7,000 boe per day which puts the company on track to meet its forecast exit rate of 7,200 and positions Twin Butte for continued growth in 2011.With continued success at our Frog Lake heavy oil, Bruce light, and Princess medium oil plays and over 90 percent of the capital plan focused on oil based activities, liquid production weighting will grow to in excess of 50 percent by the end of the year and in excess of 60 percent by the end of 2011.
The Company has also entered into a natural gas fixed swap hedge agreement on 4,500 GJ/d at $5.90 per GJ for the period of November 1, 2010 through October 31, 2011.
Twin Butte is in an enviable position of having a significant inventory of both oil and gas drilling locations allowing us to prioritize capital to maximize return and minimize payout times. Although the program is almost exclusively oil based, some capital will continue to be spent on de-risking different scalable gas plays in the Eastern Plains and the Deep Basin of Alberta. Our recent Ansell Cardium success is an example of this plan. This derisking will ensure the Company's significant resource style gas growth opportunities are ready to be executed upon when gas pricing improves.
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.
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, 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.
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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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