Twin Butte Energy Ltd TBTEF

TBE in good shape thanks to hedges

[PUNJABI]

Let's talk about the negatives first.

Line of credit has not be finalized.

Annual average Production projected 17500

The qtr production was lower by 1272 bbl/day as compared to last quarter.

With WTI over $60 where TBE is close to breakeven plus with very attractive hedges for the remaining year.  I cannot see line of credit going below the existing outstanding liability. If there is any reduction it is not going to be significant considering that their fund flow increased qtr over qtr & they have less debt. Their debt reduced by $20m qtr over qtr & now the debt to cash ratio is only 1.5. Very impressive while quite a few oil companies have more than double of that. The low price of oil is the only factor only.

Expenses are coming down. Under the present market conditions I think that the management is doing a good job.  I was of the opinion that they should have cut the dividend while back. If the oil trades over $60 & with their hedges  & debt to cash flow ratio of only 1.5 times TBE can afford to pay dividend. It has a very low payout ratio thanks to huge hedges
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They have reduced the capex & the production has come down. But it is not by much so far during the first quarter.  Under the existing conditions it is better that I expected & the reduction is heavy oil. The annual average production will drop further as the capex is reduced but the cashflow is projected to increase  for 2015. It is great that despite the drop in production they have projected to increase the cash flow, reduce cost  and debt.  I do not have a problem with that.  

TBE is doing well in the present  market conditions but this is not properly  reflected in the share price.

I think investors can now see more clarity & once the line of credit is confirmed the stock will trade with the market.