GREY:TBTEF - Post by User
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spazzmanon Oct 01, 2012 7:05pm
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Post# 20435371
12 month target $3.45
12 month target $3.45
| Oct 1, 2012 10:35 EDT |
| Twin Butte Energy |
| By MPL Staff Writer |
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Acumen Capital analyst Trevor Reynolds maintains his “buy” recommendation for the shares of Twin Butte Energy Ltd. (TSX-TBE; $2.85). He also increases his 12-month target price to $3.45 from $3.25.
Twin Butte is acquiring privately held Waseca Energy for about $127 million (net of $7.5 million in working capital). Sprott Resource Corp. owns over 82 per cent of Waseca.
Waseca produces heavy oil and has prospective holdings in the Lloydminster area, which spans east-central Alberta and west-central Saskatchewan. This is where Twin Butte’s existing core properties are located.
Waseca, which has a 100 per cent working interest in most of its properties and is the operator for all of its assets, produces about 3,500 barrels of heavy oil a day. The deal also includes about 46,300 net acres of undeveloped lands with a 99 per cent working interest and a significant seismic data base.
As well, Waseca gives Twin Butte another 4.4 million barrels of oil equivalent (weighted 98 per cent to oil) and proved plus probable reserves of 7.9 million barrels of oil equivalent (weighted 96 per cent to oil), as evaluated by an independent reserve engineer. The assets include over 130 development drilling locations, with an additional 30 exploration prospects defined by seismic work.
Mr. Reynolds says the price Twin Butte is paying is in-line with what the company paid for two recent acquisitions: Avalon Exploration and Emerge Oil & Gas.
Twin Butte will fund the transaction through a combination of cash and shares.
Mr. Reynolds says the Waseca acquisition is a strong strategic and operational fit for Twin Butte. Once the deal closes—likely in early November—Twin Butte will have access to about 220,000 net undeveloped acres in the Lloydminster heavy oil area. It will also have more than 700 net heavy oil drilling locations, with significant exploration and potential for enhanced recovery.
Twin Butte also announced that after the Waseca acquisition closes, it will increase its monthly dividend to $0.016 (or $0.192 a year) from $0.015 (or $0.18 a year).
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