CALGARY, Jan. 15, 2016 /CNW/ – Twin Butte Energy Ltd. (TSX:TBE) (“Twin Butte” or the “Company“) today announced amendments to the Company’s bank credit facilities and provided an operational update.
Twin Butte has finalized the semi-annual review of its bank credit facility with its bank syndicate. The Company’s total credit facilities have been amended to $225 million, consisting of a $115 million revolving syndicated facility, a $25 million operating facility, and an $85 million non-revolving credit facility. Currently, the Company has approximately $207 million drawn on the bank credit facilities.
The revolving syndicated facility and the operating facility, which comprise the Company’s borrowing base facilities, are reviewed semi-annually and are due on May 26, 2017, unless extended at the Company’s request with consent of the lenders. The non-revolving credit facility is due on April 30, 2016.
Further details can be found in the Company’s amended and restated credit agreement dated January 15, 2016, that will be filed on Twin Butte’s SEDAR profile at www.sedar.com.
As announced on December 9, 2015, Twin Butte has engaged Peters & Co. Limited and National Bank Financial Inc. as its financial advisors to advise the Company in connection with a comprehensive review and analysis of its strategic alternatives process. Strategic alternatives may include, but are not limited to, a debt restructuring, a sale of all or a material portion of the assets of Twin Butte, either in one transaction or in a series of transactions, the outright sale of the Company, or merger or other transaction involving Twin Butte and a third party, and/or alternative financing initiatives. The Company cautions that there are no assurances or guarantees that the process will result in a transaction or, if a transaction is undertaken, the terms or timing of such a transaction Twin Butte currently expects to update stakeholders on progress of the strategic alternatives process late in Q1 2016.
Twin Butte drilled six wells in the fourth quarter, following up success in the Provost area. Three Sparky multistage frac horizontal wells were drilled at Sounding Lake South, one multistage frac Lithic channel at Gillespie, a four leg multilateral targeting a different Lithic channel trend also at Gillespie, and one vertical stratigraphic test well. Results have been better than the Company’s type curve with production from the 5 producing wells currently over 600 boe/d. Costs were at the low end of the Company’s expectations.
The adoption of new technology to the oil rich Provost and Lloydminster areas is improving development economics and has materially increased the depth of the Company’s development inventory. Average per well costs continue to fall, while average per well productivity has increased. The embedded upside value in Twin Butte is material.
Twin Butte has significant cash flow torque to even a modest recovery in oil prices. However, at current spot and strip oil prices, cash flow will be below the level of capital expenditures required to maintain production in 2016.
About Twin Butte:
Twin Butte Energy Ltd. is a value oriented intermediate producer with a deep, low risk, drilling inventory focused on medium and heavy oil reservoirs. Twin Butte is positioned to provide shareholders with growth potential over the long term. Twin Butte is committed to continually enhance its asset quality. The common shares of Twin Butte are listed on the TSX under the symbol “TBE”.