Twin Butte Energy announces 2013 Q1 results



CALGARY, May 14, 2013 /CNW/ - (TSX:TBE.TO - News) - Twin Butte Energy Ltd. ("Twin Butte" or the  "Company") is pleased to report financial and operational results for the three months ended March 31, 2013.

Highlights of Twin Butte's first quarter 2013 are as follows:

  • Continued demonstration of a disciplined capital program, providing our sustainable dividend paying model with a payout ratio of 97 percent and a total payout ratio net of the DRIP of 94 percent in the first quarter 2013. This was accomplished during a challenging commodity and operational environment for Canadian heavy oil producers. Since implementation of the Company's dividend in January 2012,
    per share in dividends have been paid as at the end of March.
  • Recorded quarterly production of 17,254 boe per day, an increase of 30 percent over the same period of 2012.
  • Generated quarterly funds flow of $32.4 million, a 23 percent increase over the same period of 2012.
  • Executed an organic capital program of $19.6 million which included the drilling of 28 gross (28 net) wells at an 89 percent success rate. The Company successfully sold $4.0 million in non-core assets in the quarter. A further $3.2 million of noncore assets have been sold in the second quarter of 2013 to date.
  • Maintained a solid balance sheet with net debt at $200.5 million relative to the existing credit facility of $280 million.

Certain selected financial and operations information for the three months ended March 31, 2013 and 2012 comparatives are outlined below and should be read in conjunction with Twin Butte's interim financial statements and accompanying Management Discussion and Analysis ("MD&A") for the three months ended March 31, 2013 and the audited annual Financial Statements and accompanying MD&A for the year ended December 31, 2012.  Full versions of the statements and accompanying notes will be filed on SEDAR and also on the Company website.


  Three months ended March 31
  2013 2012 % Change
Financial ($ 000's, except per share amounts)      
Petroleum and natural gas sales 71,764 72,497 -1%
Funds flow (1) 32,423 26,400 23%
Per share basic  0.13 0.14 -7%
Per share diluted 0.13 0.14 -7%
Net income (loss)  (29,633) 14,983 -298%
Per share basic  (0.12) 0.08 -250%
Per share diluted (0.12) 0.08 -250%
Dividends declared 11,980 8,624 39%
Dividends declared, Post DRIP 10,727 8,624 24%
Capital expenditures (2) 19,625 8,058 144%
Corporate acquisitions (2) - 203,000 -100%
Net debt (3) 200,542 126,467 59%
Average daily production      
Crude oil (bbl per day) 14,673 10,187 44%
Natural gas (Mcf per day) 13,907 16,139 -14%
Natural gas liquids (bbl per day) 263 351 -25%
Barrels of oil equivalent (boe per day, 6:1) 17,254 13,228 30%
% Oil and NGLs 87% 80% 9%
Average sales price      
Crude oil ($ per bbl) 49.62 86.57 -43%
Natural gas ($ per Mcf) 3.50 2.34 50%
Natural gas liquids ($ per bbl) 78.01 90.01 -13%
Barrels of oil equivalent ($ per boe, 6:1) 46.21 60.23 -23%
Operating netback ($ per boe) (4)      
Petroleum and natural gas sales 46.21 60.23 -23%
Cash (loss) gain on derivative instruments 11.26 2.10 436%
Royalties (9.14) (14.52) 37%
Operating expenses (21.88) (18.62) -18%
Transportation expenses (2.33) (2.48) 6%
Operating netback 24.12 26.71 -10%
Wells drilled       
Gross 28.0 32.0 -13%
Net 28.0 21.7 29%
Success (%) 89 100 -11%
Common Shares      
Shares outstanding, end of period 249,797,912 191,682,653 30%
Weighted average shares outstanding - diluted 250,435,239 186,404,231 34%

(1) Funds flow from operations and funds flow from operations netback are non-GAAP 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 and expenditures on decommissioning liabilities.
(2) Corporate acquisitions is a non-GAAP measure and includes total consideration plus working capital deficiency acquired in a corporate acquisition. Capital expenditures is a non-GAAP measure calculated as the purchase or sale price of an asset, plus development capital expenditures added to PP&E. Corporate acquisitions are excluded from this measure.
(3) Net debt is a non-GAAP measure representing the total of bank indebtedness, accounts payables and accrued liabilities, cash dividend payable, less accounts receivables, deposits and prepaids.
(4) Operating netback is a non-GAAP measure calculated as the average per boe of the Company's oil and gas sales plus realized gains on derivatives, less royalties, operating and transportation expenses.


The first quarter of 2013 was dominated by the dramatic widening of the differential between benchmark pricing of WTI (West Texas Intermediate) and the Canada heavy oil benchmark WCS (Western Canadian Select) from the historical average differential levels of under $20.00 in the fourth quarter of 2012. The differentials hit record levels in February of over $35.00 but have fortunately contracted and are forecasted to average about $19.00 in the second quarter. The first quarter differential was $31.96 per bbl versus the fourth quarter average of $18.69 per bbl. These all-time high oil differentials combined with extreme weather-related operating conditions made early 2013 a most challenging environment for virtually all Western Canadian heavy oil producers. In addition the Company experienced abnormally high blending costs of $15.66 in the first quarter as compared to average $10-11 costs which further reduced the wellhead price received as a result of above average condensate costs. Even with these financial and operational challenges Twin Butte executed an extremely disciplined capital plan, managing to underspend cash flow including dividends paid by approximately $2.0 million leading to a total payout ratio for the quarter of 94 percent. It is this constant focus on dividend sustainability and balance sheet management which should provide investors with great comfort that Twin Butte is being managed for the long term sustainability of its dividend and asset base.


Consistent with the Company's increasing production volumes and liquids weighting, first quarter 2013 funds flow from operations increased by 23 percent when compared to the same period of 2012 reaching $32.4 million. This level of funds flow, although significantly impacted by reduced heavy oil pricing, internally funded $12 million of dividend payments and a net capital program of $19.6 million leading to a total payout ratio of 94 percent.

Although hampered by challenging weather related field conditions, the sale of 80 boe per day of non-core production, and the previously announced reduction of approximately 800 bbls per day of production at Primate, the Company exceeded its previously reported guidance of 17,100 boe per day, with first quarter production averaging 17,254 boe per day. With current production capability of just over 17,600 boe per day, Twin Butte remains on track to achieve its forecasted 2013 production average of 17,400 boe per day.

The Company's first quarter capital plan of $19.6 million was funded by internal funds flow and included the disposition of $4.0 million of noncore assets. These divested assets were predominantly undeveloped land in West Central Alberta and B.C., but had associated production of approximately 80 boe per day. The Company recently closed the additional disposition of 50 bbls per day of non-core assets in British Columbia for $3.2 million.

Operating costs in the first quarter increased to just under $22.00 per boe mainly as a result of unseasonable weather conditions which resulted in higher than normal workover expenses, snow clearing and propane costs. The Company expects to see operating costs fall back below $20.00 per boe for the balance of the year.

The Company's balance sheet remains very strong with end of first quarter net debt of $200.5 million, which represented just over 1.5 times first quarter annualized cash flow, and was well within with our existing credit facility of $280 million. It is anticipated that net debt will remain fairly constant for the remainder of 2013, and that with improved heavy oil pricing for the remainder of 2013 quarterly cash flow will increase, bringing the Company's run rate debt to cash flow to our long term goal of less than 1.5 times. It is anticipated the Company's current credit facility will be renewed without any changes during the second quarter of 2013.


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PS.  Still ok not like how the sp dip would suggest in many names.




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