Twin Butte writes off again
In November, 2013 Twin Butte bought a private, medium oil producer called Blackshire Oil and Gas.They paid $356 million for this company.In the last quarter of 2013 it looks like they wrote off almost $150 million of their investment.Their net income for the last quarter of 2013 and this quarter were negative but they did avoid paying income tax.It looks like they wrote off another $50 to $60 million in this quarter.On the other hand,Twin Butte inherited about 7000 barrels of oil per day of medium and light oil from Blackshire;the net back is higher than on heavy oil.
Heavy write offs
It appears that Twin Butte has written off about $200 million of their $356 million investment in Blackshire already.However it has done so at the expense of net income and earnings per share.Investors cannot see healthy earnings nor a healthy ratio for price /earnings per share.On the other hand Twin Butte reported record production at 22,529 barrels per day on average(during the quarter) as well as record funds flow of $51.4 million or $.15 per share.Twin Butte expects production for the year on average to be between 23,000 and 24,000 barrels per day.That should make cash flow per share for the year at $.75 to $.80 per share.This will not likely flow through to net income nor earnings per share.
The exploration program
Twin Butte spent $38 million on exploration with a 94% success rate.Most of it was done in Provost, Alberta which is newly acquired property.And much of that is horizontal drilling as opposed to vertical drilling.Horizontal drilling is done to delineate the size of a pool and has a much higher success rate.It intends to drill 50 more wells at Provost in 2014 .Twin Butte states that the net back on these wells is about $15 to $20 a barrel higher than on their heavy oil.Twin Butte also says that this improves the sustainability of their dividend.This makes sense!
Frog Lake is another area where they have property.They had four wells in 2013 and will drill another 40 horizontal wells in 2014.This area shows good promise to increase production in 2014.
Twin Butte paid off some of their credit facility and has almost $100 million left on their banking facility.So they will not likely need a new equity issue(certainly not in 2014).
2014 cash flow
In 2013 TW had about 17,000 barrels per day of production.They bought Blackshire and gave guidance that they would have 7000 barrels of new production.However it was expected to only have 23,000 or 24,000 barrels by the third or fourth quarter.In actual fact, many watchers did not expect to have 22,500 barrels by the first quarter.There are less production problems with light oil than with heavy oil but 22,500 barrels shows good management effect tiveness.Also TW has a little cash on hand to pick up some new properties that other companies divest(for needed cash).Twin Butte says that "the Company continues to review acquisition opportunities".I believe that Twin Butte Energy has fairly aggressive as well as effective management and may soon buy another small property.
Heavy write offs
It appears that Twin Butte has written off about $200 million of their $356 million investment in Blackshire already.However it has done so at the expense of net income and earnings per share.Investors cannot see healthy earnings nor a healthy ratio for price /earnings per share.On the other hand Twin Butte reported record production at 22,529 barrels per day on average(during the quarter) as well as record funds flow of $51.4 million or $.15 per share.Twin Butte expects production for the year on average to be between 23,000 and 24,000 barrels per day.That should make cash flow per share for the year at $.75 to $.80 per share.This will not likely flow through to net income nor earnings per share.
The exploration program
Twin Butte spent $38 million on exploration with a 94% success rate.Most of it was done in Provost, Alberta which is newly acquired property.And much of that is horizontal drilling as opposed to vertical drilling.Horizontal drilling is done to delineate the size of a pool and has a much higher success rate.It intends to drill 50 more wells at Provost in 2014 .Twin Butte states that the net back on these wells is about $15 to $20 a barrel higher than on their heavy oil.Twin Butte also says that this improves the sustainability of their dividend.This makes sense!
Frog Lake is another area where they have property.They had four wells in 2013 and will drill another 40 horizontal wells in 2014.This area shows good promise to increase production in 2014.
Twin Butte paid off some of their credit facility and has almost $100 million left on their banking facility.So they will not likely need a new equity issue(certainly not in 2014).
2014 cash flow
In 2013 TW had about 17,000 barrels per day of production.They bought Blackshire and gave guidance that they would have 7000 barrels of new production.However it was expected to only have 23,000 or 24,000 barrels by the third or fourth quarter.In actual fact, many watchers did not expect to have 22,500 barrels by the first quarter.There are less production problems with light oil than with heavy oil but 22,500 barrels shows good management effect tiveness.Also TW has a little cash on hand to pick up some new properties that other companies divest(for needed cash).Twin Butte says that "the Company continues to review acquisition opportunities".I believe that Twin Butte Energy has fairly aggressive as well as effective management and may soon buy another small property.
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