Twin Butte Energy begins strategic review, outlines possibilities

By Mark Reccek

Bethlehem, Pa., Dec. 10 – Twin Butte Energy Ltd. has implemented a strategic review process to identify, examine and consider a host of alternatives available to the company, according to a Thursday press release.

The release said alternatives include a debt restructuring, sale of all or a material portion of the assets of the company, the outright sale of the company, or merger or other transaction involving the company and a third party, and/or alternative financing initiatives.

The company put together a special committee of directors consisting of chairman Jim Brown, Warren Steckley and John Brussa to oversee the process, the release said.

The company recently retained Peters & Co. Ltd. and National Bank Financial Inc. as financial advisers to advise the company in identifying, examining and considering a host of strategic alternatives available in regard to the current share price

“It is Twin Butte’s current intention not to disclose developments with respect to the process unless and until the board of directors has approved a specific transaction, or otherwise determines that disclosure is necessary or appropriate,” the release said. “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.”

The company has not yet set a definitive schedule to complete its identification, examination and consideration of strategic alternatives.

Also, the company said the board approved the suspension of its monthly dividend, effective immediately, to support its balance sheet during this period of commodity price weakness and to ensure that the company has maximum flexibility entering 2016.

The release said current availability of the credit facilities stands at C$275 million. However, the company expects total credit facilities to decrease to C$230 million, which will consist of a revolving syndicated facility and a non-revolving syndicated facility, with amendments requiring amortization of the non-revolving facility.

According to the release, bank debt outstanding, including working capital deficit, as of Sept. 30 was C$228 million and is expected to be C$212 million to C$216 million by the end of December.

The company said it expects to issue an update in early January with respect to the finalization of the credit facilities.

The company also announced capital spending is expected to be below C$83 million for 2015 as drilling and completion costs continue to come in below estimates and spending on the Wildmere water flood project has been deferred due to low oil prices, the release said.

The company said it 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.

Twin Butte is an oil and gas company based in Calgary, Alta.

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