Twin Butte Energy Completes Acquisition of Black Shire Energy11/5/2013
CALGARY, Nov. 5, 2013 – Twin Butte Energy Ltd. (TSX: TBE) (“Twin Butte” or the “Company”) is pleased to announce that the acquisition of Black Shire Energy Inc. (“Black Shire”) pursuant to a plan of arrangement under the Business Corporations Act (Alberta) was completed today (the “Acquisition”) for total consideration of approximately $358.0 million, including the assumption of approximately $107.6 million of net debt. Total cash of $138 million was allocated to former Black Shire shareholders along with the issuance of approximately 54.0 million common shares to acquire all of the outstanding securities of Black Shire. After giving effect to the Acquisition and the conversion of all of the subscription receipts discussed below, approximately 342.1 million common shares of Twin Butte are outstanding.
Black Shire, which was amalgamated with Twin Butte following the completion of the Acquisition, was a private company with a focused asset base in the greater Provost area, producing approximately 7,000 boe per day (93 percent medium gravity oil). The greater Provost area is directly adjacent to Twin Butte’s core Lloydminster heavy oil area. Black Shire was an attractive acquisition for Twin Butte in that it has demonstrated its ability to generate substantial free cash flow while developing its large and low risk horizontal drilling inventory, providing growth in production and reserves. Twin Butte believes that the Acquisition strategically supports Twin Butte’s dividend model and enhances the Company’s long term dividend sustainability.
The Acquisition is accretive to Twin Butte on all key metrics, especially cash flow per share. The Acquisition is consistent with Twin Butte’s historic strategy of acquiring quality long life assets, with large resource potential within focus areas where Twin Butte has expertise. Twin Butte’s strategy of providing shareholders with long term total returns comprised of both income and moderate growth is expected to be strengthened through the Acquisition by:
– Reducing Twin Butte’s anticipated annual production decline rate from 29 percent to 26 percent;
– Enhancing Twin Butte’s netback from current levels of $22 to $27 per boe; and
– Increasing Twin Butte’s liquids production weighting from 88 to 91 percent.
The Acquisition was partially funded through a bought deal public financing (the “Offering”) through a syndicate of underwriters led by Peters & Co. Limited. Pursuant to the Offering, Twin Butte issued 35,989,000 subscription receipts (“Subscription Receipts”) at a price of $1.95 per Subscription Receipt for gross proceeds of approximately $70 million. In accordance with their terms, each Subscription Receipt was exchanged for one common share of the Company upon the closing of the Acquisition and the proceeds from the sale of the Subscription Receipts were released from escrow. Holders of Subscription Receipts are not required to take any action in order to receive the common shares to which they are entitled.
Twin Butte is also pleased to announce that the Company’s combined production is now approximately 23,200 boe per day (91 percent oil and liquids), with net debt estimated at $367 million or approximately 1.7 times Twin Butte’s estimated 2014 cash flow, on an increased $400 million credit facility.
The Company will be releasing its third quarter financial and operating results after market close on November 14, 2013. An updated copy of the Company’s investor presentation has been posted on the Company’s website.
About Twin Butte
Twin Butte is a growing, value oriented intermediate producer with a significant low risk, high rate of return drilling inventory focused on large original oil in place medium and heavy oil pool exploitation. With a stable low decline production base, Twin Butte is well positioned to live within cash flow while providing shareholders a sustainable dividend and moderate per share production growth potential over both the short and long term. Twin Butte is committed to continually enhance its asset quality while focusing on the sustainability of its dividend. The Twin Butte Shares are listed on the TSX under the symbol “TBE”.
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