Twin Butte Energy announces 2015 year-end results
Twin Butte Energy Ltd. is pleased to report financial and operational results for the three and twelve months ended December 31, 2015, along with year-end reserves and an operational update.
In 2015, the long term horizontal potential of Twin Butte's asset base was confirmed through the drilling of several Provost and Lloydminster area projects which have delivered oil production at rates above expectation with costs below expectation. By year end, horizontal well drilling and completion costs had decreased close to 50% compared to those reported in 2014, primarily due to improved execution. Of particular note has been the success of the Company's open hole multilateral drilling in both the Lloydminster and Provost areas. The most recent Provost area quad-lateral drilled in Q4 2015, and brought online December 1st, has produced in excess of 26,000 barrels of oil to date with a current rate of ~250 barrels of oil per day with an all in on-stream cost of under $1.3MM. This result, amongst several others, is a direct reflection of the Company's strengthened technical team and quality land position, and has opened up a materially larger inventory of future drilling opportunities across the Company's existing asset base. Based upon current cost estimates and average expected type curve production and compared to reported industry results, the Company believes that Twin Butte's inventory has the potential to deliver economic returns at oil prices over $40 US WTI per barrel which are equivalent or better than most, if not all, oil resource plays in Western Canada.
Cash flow for the year of $178 million was materially supported by the Company's strong 2015 oil hedge book, and exceeded guidance largely due to the 11% annual per boe reduction in corporate operating and transportation costs.
Despite 2015's operational successes, and the recent modest recovery in oil price, the current commodity price environment is very challenging for a number of oil and gas companies in Western Canada including Twin Butte. With reduced hedge protection, first quarter 2016 cash flow, based upon commodity prices realized to date and forecast for the balance of the quarter, is expected to be negative. The Company has shut in additional volumes in the quarter primarily associated with our non-core gas properties, with Q1 2016 quarterly production expected to be just under 14,000 boe per day. Due to the current pricing environment and lack of liquidity no development projects have or will be undertaken in Q1 2016.
Twin Butte continues to work cooperatively and proactively with our lending syndicate to ensure adequate liquidity is maintained through the previously announced and ongoing strategic alternatives process. The Company is pleased with the interest in the process to date and will disclose specific developments when the Board of Directors has approved a specific transaction or otherwise determined that disclosure is necessary or required.
Highlights of 2015 include:
- Generated $178 million of funds flow, ($0.50/share).
- Reduced net debt by 19% or $65.4 million from $353.3 million at December 31, 2014 to $287.9 million at December 31, 2015.
- Completed a reduced organic capital program of $80 million ($78 million net of dispositions), including the drilling of 49 gross (49 net) wells, results of which increased the Company's potential horizontal inventory to over 800 wells.
- Initiated water flood operations at our Freemont property.
- Produced an average of 17,052 boe per day for the year (15,444 boe per day in Q4)
- Returned $29 million dollars to shareholders through dividends.
Twin Butte Energy Ltd.
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