Newcastle will face Belgian side Zulte-Waregem, in the next stage.
Butt said: “We have a great chance in the UEFA Cup this season just as we did a couple of years back when we were so disappointed to lose to Sporting Lisbon in the quarter-final.
“For some reason we have produced some of our best performances of the season in the UEFA Cup. The games and the style of play needed have been suiting us.
“We have a good chance in the competition – and we are capable of doing that if you look at the teams that are left in it.
“The quality of the teams in the UEFA do not get as good as the Champions League until the latter stages, like the quarterfinals or the semis.
“And if we can get that far anything can happen – just look at Middlesbrough.
“That is my experience having played in my first year here in the UEFA and this season. You get decent teams in the group stages, but not great teams until the semi-final.
“In the Champions League there are great teams throughout so we have to look at this competition and believe we can go all the way.”