Peters & Co. Limited National Bank Financial Inc. December 205 Twin Butte Energy Ltd. Strategic Alternatives Process Twin Butte Energy Ltd. ("Twin Butte" or the "Company") has initiated a process to identify potential strategic alternatives and has retained Peters & Co. Limited ("Peters & Co.") and National Bank Financial Inc. ("NBF") as its financial advisors to assist in this process. TABLE OF CONTENTS Corporate Highlights... Overview Provost Medium Oil...2 Lloydminster Heavy Oil..2 Non-Core...3 Financial...3 Process and Contacts...4 Disclaimer...5 PETERS & CO. LIMITED 2300 Jamieson Place 308 Fourth Avenue SW Calgary, Alberta T2P 0H7 www.petersco.com J.G. (Jeff) Lawson 403.26.2298 jlawson@petersco.com Michael R. Hayward 403.26.2254 mhayward@petersco.com Strategic alternatives may include, but are not limited to, a sale of all or a material portion of the assets of Twin Butte, either in one transaction or in a series of transactions, the outright sale of the Company, or merger or other transaction involving Twin Butte and a third party, and/or alternative financing initiatives. Twin Butte is a Canadian heavy and medium oil focused exploration and production company listed on the Toronto Stock Exchange under the symbol "TBE". Twin Butte's core operations are concentrated on the development of medium oil at Provost and heavy oil at Lloydminster, which account for ~90% of Twin Butte s production. CORPORATE HIGHLIGHTS Q3 205 average production of 6,303 BOE/d (88% oil and liquids): Production base transitioned to a lower more predictable, decline profile Q3 205 field netback of $2.99/BOE (excluding realized hedges): Annualized net operating cash flow (before hedging, G&A and interest) of ~$78 million Proved plus Probable reserves of 6.2 MMBOE : Proved reserves of 36.3 MMBOE Proved developed producing reserves of 24.0 MMBOE Material growth potential with medium and heavy horizontal drilling inventory of 750-,000 locations: Internally developed technological advancements in horizontal medium / heavy oil drilling (unlined and multi-lateral) have yielded positive results and increased drilling inventory Well costs are ~45% lower year-over-year through efficiencies and cost reductions Significant medium oil (API of 2 to 25 ) production base at Provost with Q3 205 production of 7,855 BOE/d (93% oil and liquids) Large scale heavy oil (API of 2 to 6 ) production base at Lloydminster with Q3 205 production of 6,783 BOE/d (97% oil and liquids) Additional non-core properties with Q3 205 production of,666 BOE/d (28% oil and liquids) Large, concentrated land position including over 385 net sections of undeveloped land Substantial tax pool balance of $644 million as at September 30, 205 CORE AREA OVERVIEW PRODUCTION (Q3 205) 2P RESERVES,666 BOE/d 0% 6,783 BOE/d 42% 7,855 BOE/d 48% 4.4 MMBOE 24% 26.3 MMBOE 43% 20.5 MMBOE Provost 33% Lloydminster Other NATIONAL BANK FINANCIAL INC. Intact Place, Suite 800 3-6th Avenue SW Calgary, Alberta T2P 3H2 www.nbfm.ca Tom MacInnis Head of Financial Markets Calgary 403.290.507 tom.macinnis@nbc.ca Chris Muldoon Director Investment Banking 403.290.505 chris.muldoon@nbc.ca As per the McDaniel and Associates Consultants Ltd. reserves report effective December 3, 204 This Information Memorandum is prepared solely for the use of certain qualified Interested Parties to provide information only. The information contained herein, while obtained from sources that we believe to be reliable, is not guaranteed as to its accuracy or completeness. This Information Memorandum is for information purposes only and does not constitute an offer to sell or a solicitation to buy securities of Twin Butte Energy Ltd.
PROVOST MEDIUM OIL OVERVIEW Predictable Medium Oil Production Base Stable, high netback production of 7,855 BOE/d (Q3 205) is obtained primarily from the Cummings/Dina and Sparky zones and Lithic channels (Rex, GP, Waseca) High Working Interest (~86%) in 55 Net Sections Multi-zone Medium Oil Potential Horizontal multistage fractured wells targeting the Sparky and Lithic channel intervals have opened up significant inventory for development Low-risk drilling inventory of 330-375 future horizontal locations Proved plus Probable reserves of 26.3 MMBOE Evolving Technologies are Driving Lower Costs and Higher Returns Successful deployment of new multi-lateral horizontal drilling techniques: DC&E costs for Sparky multistage horizontals have decreased 43% yearover-year to ~$800,000 per well Six Sparky horizontal wells brought on production in Q3 205 have yielded an average rate of >00 BOE/d (>85% oil) per well over the first three months, exceeding type curve expectations The Sounding Lake Sparky play yields development economics comparable to the Dodsland Viking oil play based on current Twin Butte costs and productivity (based on C$50 WCS equivalent pricing) Long term waterflood potential directly offsetting existing successful Sparky waterflood pilot Potential for horizontal water injectors to further reduce capital and operating costs Expanding Area Infrastructure New oil battery at Sounding Lake commissioned in Q3 205 is continuing to drive lower operating costs for current production and future development PROVOST MEDIUM OIL LLOYDMINSTER HEAVY OIL OVERVIEW Heavy Oil Production Base with Material Horizontal Development Potential Conventional heavy oil production of 6,783 BOE/d (Q3 205) Prospective for multiple zone development including the Colony, Upper McLaren, Sparky, General Petroleum, Rex and Waseca at depths of 500 to 700 metres Horizontal drilling inventory of 400-600 future oil development locations Proved plus Probable reserves of 20.5 MMBOE High Working Interest (~89%) in 505 Net Sections Multiple Upside Waterflood Projects Identified Expected to reduce overall heavy oil decline rates and increase asset value upside Waterflood at Freemont is currently under construction and scheduled to be onstream in early 206 Area Leader in Technology Advancement Increased inventory on existing land base due to multi-lateral horizontal drilling: DC&E costs for Lloydminster unlined single and multistage frac horizontals have been reduced by 46% year-over-year to ~$700,000 per well The operating cost structure of current horizontal development in the area of $0.4/BOE is significantly lower than the costs associated with legacy vertical production Five wells brought on production in Q3 205 have yielded an average rate of >80 Bbls/d over the first three months, exceeding type curve expectations LLOYDMINSTER HEAVY OIL As per the McDaniel and Associates Consultants Ltd. reserves report effective December 3, 204 2
NON-CORE OVERVIEW Q3 205 production of,666 BOE/d (28% oil and liquids) Proved plus Probable reserves of 4.4 MMBOE Non-core operating areas include West Central Alberta, Pincher Creek, and the Peace River Arch As per the McDaniel and Associates Consultants Ltd. reserves report effective December 3, 204 FINANCIAL OVERVIEW CREDIT FACILITY Twin Butte is currently in discussions with its banking syndicate respecting the semi-annual review of its credit facilities. Current availability under the credit facilities remains at $275 million. Based upon initial discussions, Twin Butte anticipates a decrease in total credit facilities to an approximate amount of $230 million consisting of a revolving syndicated facility and a non-revolving syndicated facility, with amendments requiring, inter alia, amortization of the non-revolving facility. Twin Butte anticipates that it will provide an update in respect of the finalization of its credit facilities during the early part of January 206. Bank debt outstanding, including working capital deficit, as of September 30, 205 was $228 million and is forecast to be $22 to $26 million at year end 205. CAPITALIZATION SUMMARY (Q3 205) Amount Shares outstanding (MM) 354 Net debt ($MM) $308 Convertible debentures ($MM) $85 Bank indebtedness ($MM) $20 NETBACK SUMMARY (Q3 205) Netbacks ($/BOE) Provost Lloyd Other Corporate Production (BOE/d) 7,855 6,783,666 6,303 Realized price $40.58 $37.23 $26.20 $37.72 Royalties ($5.24) ($4.39) ($2.24) ($4.58) Operating costs ($6.60) ($22.73) ($26.46) ($20.5) Field netback $8.75 $0.2 ($2.50) $2.99 Includes transportation costs TAX POOLS Classification ($MM) Amount Annual Deductibility Canadian exploration expense $ 00% Canadian development expense $24 30%, declining balance Canadian oil and gas property expense $222 0%, declining balance Undepreciated capital cost $86 Primarily 25%, declining balance Non-capital losses $5 00% Other $5 Various Total $644 3
Process and Contacts Twin Butte has retained Peters & Co. and NBF as its financial advisors to coordinate all aspects of this strategic alternatives process and Peters & Co. and NBF will act as the sole contact for all parties who have expressed an interest in pursuing a strategic transaction with Twin Butte ("Interested Parties"). An online virtual data room has been established, which provides a comprehensive technical description of Twin Butte's properties and exploration prospects, as well as detailed corporate, operational and financial information. Interested Parties that execute a confidentiality agreement will receive access to the online data room and may receive a technical presentation from Twin Butte. Twin Butte, Peters & Co., and NBF expressly reserve the right at any time to amend or terminate the strategic alternatives process and/or these procedures, to decline to permit an Interested Party to participate in the process, to terminate discussions with any or all Interested Parties, to reject any or all offers, or to negotiate with any party with respect to a possible transaction. Further information will be communicated solely to Interested Parties that have signed a confidentiality agreement. CONTACTS Peters & Co. and NBF will act as the sole contact for all Interested Parties. The directors, officers and employees of Twin Butte should not be contacted directly. All communications and inquiries from Interested Parties should be directed to one of the representatives listed below: Peters & Co. Limited 2300 Jamieson Place 308 Fourth Avenue SW Calgary, Alberta T2P 0H7 National Bank Financial Inc. Intact Place, Suite 800 3-6th Avenue SW Calgary, Alberta T2P 3H2 J.G. (Jeff) Lawson 403.26.2298 jlawson@petersco.com Tom MacInnis Head of Financial Markets Calgary 403.290.507 tom.macinnis@nbc.ca Michael R. Hayward 403.26.2254 mhayward@petersco.com Chris Muldoon Director Investment Banking 403.290.505 chris.muldoon@nbc.ca 4
Disclaimer This Information Memorandum is based on information provided by Twin Butte Energy Ltd. ("Twin Butte" or the "Company") from its own records and from other sources. The Information Memorandum is being distributed, on behalf of Twin Butte, by Peters & Co. Limited ("Peters & Co.") and National Bank Financial Inc. ("NBF"), the Company's financial advisors, solely for the use by a qualified third party ("Third Party"). The information contained herein (the "Information") has been prepared in good faith to assist a Third Party in completing its own independent evaluation of the assets, but does not purport to be all inclusive or to contain all of the information that a Third Party may desire or that may be required by a Third Party to properly conduct an evaluation. In all cases, a Third Party should conduct its own independent investigation and analysis of the assets and the data set forth in this Information Memorandum. Peters & Co. and NBF have not independently verified any of the Information contained herein. Neither Peters & Co., NBF, the Company nor their respective affiliates make any representation or warranty (expressed or implied) as to the accuracy or completeness of this Information Memorandum. Neither Peters & Co., NBF, the Company nor their respective affiliates will assume any liability for a Third Party's use of this Information Memorandum or any other oral, written or other communication transmitted to a Third Party during the course of its evaluation. Twin Butte, Peters & Co., and NBF expressly disclaim any and all liability and responsibility for and associated with the quality, accuracy, completeness or materiality of the Information. A Third Party will conduct its own independent evaluation and analysis of the Information and satisfy itself as to the quality, accuracy, completeness and materiality of the same. The Third Party will rely solely on its own independent evaluation and analysis of the Information at all times. This Information Memorandum may include certain statements, estimates, forecasts and projections provided by the Company and with respect to the anticipated future performance of the assets. Such statements, estimates, forecasts and projections reflect various assumptions made by the Company and / or Peters & Co. and / or NBF concerning anticipated results, which may or may not prove to be correct. No representations or warranties are made as to the accuracy of such statements, estimates, forecasts or projections. The only Information that will have any legal effect will be that specifically represented or warranted in any definitive agreement, when, as and if executed. NEITHER THIS INFORMATION MEMORANDUM NOR ITS DELIVERY TO A THIRD PARTY SHALL CONSTITUTE OR BE CONSTRUED TO BE AN OFFER TO SELL ANY SECURITIES OF THE COMPANY. THIS INFORMATION MEMORANDUM SHALL NOT BE DEEMED AN INDICATION OF THE STATE OF AFFAIRS OF THE COMPANY NOR CONSTITUTE ANY INDICATION THAT THERE HAS BEEN NO CHANGE IN THE BUSINESS OR AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. 5