DENVER, CO--(Marketwire - February 26, 2008) - Bill Barrett Corporation (NYSE: BBG) today
reported full-year 2007 operating results highlighted by:
-- Production growth, up 17% to 61.2 Bcfe
-- Proved reserve growth, up 30% to 558 Bcfe, up 44% adjusting for
property sales
-- Reserve replacement ratio 382%
-- Proved, probable and possible resources of 2 Tcfe
-- Discretionary cash flow of $248.5 million, or $5.56 per diluted share
-- Net income of $26.8 million, or $0.60 per diluted share
-- Finding and development costs of $1.83 per Mcfe
Chairman and Chief Executive Officer, Fred Barrett, commented: "We are very
pleased with 2007 results, which reflect a continuation of our strong
development programs. Our team delivered record growth in reserves along
with very strong production and record cash flows, despite a challenging
natural gas price environment. We are now realizing substantial reserve
growth at a very competitive cost at our West Tavaputs and Gibson Gulch
assets.
"We are well positioned in 2008 for sustained success with 80% of our $550
to $600 million capital expenditure budget devoted to development. In
addition, the Company plans to earmark 20% of its budget for a robust
exploration program, including four new resource plays and delineation
drilling based on encouraging 2007 results at Blacktail Ridge/Lake Canyon,
Yellow Jacket and Circus. In addition, the new year brings a stronger and
more stable natural gas price environment to Rocky Mountain producers. We
expect double digit growth again in 2008."
As previously announced, natural gas and oil production totaled 61.2
billion cubic feet equivalent (Bcfe) for 2007 compared with 52.1 Bcfe in
2006. Including the effect of the Company's hedging activities, the average
sales price realized was $6.13 per million cubic feet equivalent (Mcfe) in
2007 compared with $6.60 per Mcfe in 2006. The Company's 2007 hedging
program increased its natural gas and oil revenues by $86.9 million or
$1.42 per Mcfe on average. For the fourth quarter 2007, production totaled
17.2 Bcfe, up 21% compared with 14.2 Bcfe in the fourth quarter 2006, and
the average realized price was $6.19 per Mcfe, down slightly from $6.21 per
Mcfe in the fourth quarter 2006.
Proved reserves at year-end 2007 were 558 Bcfe, up 30% from year-end 2006
and up 44% as adjusted for 2007 property sales. Capital expenditures for
2007 totaled $443.7 million. This amount is a slight increase from
estimated capital expenditures of $438.0 million provided in the Company's
release from January 17, 2008.
Discretionary cash flow (a non-GAAP measure, see page 10) was $248.5
million in 2007 or $5.56 per diluted share, up $10.0 million compared with
$238.5 or $5.39 per diluted share in 2006. The year-over-year increase was
primarily a result of higher cash operating income generated by a 17%
increase in production partially offset by a 7% decline in the average
realized price. For the fourth quarter 2007, discretionary cash flow was
$70.1 million, or $1.56 per diluted share, compared with $61.6 million, or
$1.39 per diluted share, in the prior year period. Fourth quarter 2007
results benefited from the higher year-over-year production volumes.
Net income was $26.8 million or $0.60 per diluted common share in 2007
compared with $62.0 million or $1.40 per diluted common share in 2006. The
$35.2 million decline in net income was primarily a result of $10.0 million
of higher discretionary cash from operations described above, more than
offset by certain higher non-cash expenses. For the fourth quarter 2007,
net income was $2.5 million or $0.06 per diluted common share, compared
with $11.0 million or $0.25 per diluted common share in the prior year
period. Fourth quarter 2007 results were affected by higher depreciation,
depletion and amortization expense as well as higher dry hole costs of
$13.6 million, which included proportionate expenses for drilling and
testing the lower zones of the Draco and Leviathan wells located in the
Montana Overthrust, the second Yellow Jacket exploration well located in
the Paradox Basin, the most recent West Tavaputs deep well located in the
Uinta basin and a non-operated well in the Wind River Basin.
OPERATIONS
Production, Wells Spud and Capital Expenditures
The following table lists wells spud and total capital expenditures by
basin for the full-year 2007:
Year ended December 31, 2007
Wells Capital
Spud Expenditures
Basin (gross) (millions)
----------------------------
Uinta 42 $166.4
Piceance 91 180.3
Powder River 178 39.3
Wind River 0 10.5
Other 3 47.2
----------------------------
Total 314 $443.7
===========================
Capital expenditures for 2007 totaled $443.7 million and included: $383.4
million for drilling, exploration and development of natural gas and oil
properties; $23.6 million for acquisition of proved and undeveloped
properties; $31.8 million for geologic and geophysical costs and
exploratory dry holes and abandonment; and $4.9 million for furniture,
fixtures, equipment and other assets. The Company sold its Williston Basin
and other properties for $84.4 million and received $12.1 million in
proceeds from partners to participate in joint exploration programs on
projects assembled by the Company.
Operating and Drilling Update
Uinta Basin, Utah
West Tavaputs -- Current production is approximately 80 million cubic feet
per day (MMcfed) net and the Company continues to operate two rigs in the
area, one drilling in the shallow zones and one drilling in the deeper
zones, under its winter program. On February 1, 2008, the Draft
Environmental Impact Statement (EIS) for this property was released by the
Bureau of Land Management for a 90-day public comment period, and the
record of decision is expected during the second half of 2008. The Company
is pleased that the public comment period has begun and expects that the
ultimate timing will not affect its 2008 corporate projections.
In the shallow drilling program (Wasatch/Mesaverde), the Company drilled 11
wells on
40-acre density to test the viability of increased density development.
These wells continue to have positive results. The Company expects to drill
approximately 50 wells in 2008, most of which will be 40-acre density
locations. In the deep program (Navajo/Entrada/Dakota), the
2-7D well was completed in the Navajo formation and averaged 3.2 MMcfd
production over the first two weeks. In December 2007, the Company spud an
"ultra deep" well (Pennsylvanian Weber and Mississippian Leadville) that is
expected to drill to 17,600 feet.
The West Tavaputs program continues to offer low-risk growth in the shallow
zones and deep eastern structure as well as upside opportunity through the
deep potential of the West structure, untested Mancos shale gas interval,
and ultra deep zones.
At year-end 2007, the Company had an approximate 98% working interest in
production from 93 gross wells in its West Tavaputs "shallow" and "deep"
programs.
Blacktail Ridge/Lake Canyon - During 2008, the Company plans to drill 11
wells at Blacktail Ridge and five wells at Lake Canyon. The recently
completed Blacktail Ridge 7-7 and 12-36 wells continue to produce between
150 and 200 barrels of oil per day.
Piceance Basin, Colorado
Gibson Gulch -- Current production is approximately 83 MMcfed (net). The
Piceance program continues to be a key, low-risk, high growth development
area for the Company.
During 2007, the Company installed a water management system that reduced
operating expenses in the area by approximately one-half from their peak in
the second quarter.
In February 2008, the Company added one rig to the area for a total of four
operating rigs and plans to drill approximately 110 development wells in
2008. To date, 23 wells on 10-acre densities have been completed with
positive initial results, and the Company expects that the majority of 2008
wells will be on 10-acre densities.
At year-end, the Company had an approximate 92% working interest in
production from 312 gross wells in its Gibson Gulch program.
Powder River Basin, Wyoming
Coal Bed Methane (CBM) -- Current CBM production is slightly constrained at
approximately 17 MMcfed (net); however, capacity constraints due to third
party gathering line availability should be alleviated in March 2008. The
Company currently has six rigs operating in the area and expects to drill
approximately 275 CBM wells in 2008 predominantly in the Pine Tree, Pumpkin
Creek, Willow Creek and Deadhorse areas. Development of this area requires
dewatering of wells, which takes on average six to 12 months. 2008 will see
continued dewatering of wells with a gradual increase in production from
wells drilled during 2007. At year-end, the Company had an approximate 69%
working interest in production from 568 gross CBM wells.
Wind River Basin, Wyoming
Cave Gulch/Bullfrog -- The Company recently recompleted the Bullfrog 14-18
well in the fourth and third Frontier sands with positive results. The
initial flow rate over three days was approximately 13.5 MMcfd natural gas
at 8,000 pounds flow tubing pressure. While shut-in prior to the
recompletion, facilities are in place and the well is on production. The
Company has a 63% net revenue interest in the well.
Montana Overthrust, Montana
Circus -- As reported earlier, the Company is testing the Cody shale in the
Cretaceous zones of the Draco and Leviathan wells (50% working interest).
Gas production was established in both wells with modest stimulations, and
both wells are currently shut-in to collect pressure data. The Cody
formation represents a potential regional resource play.
Paradox Basin, Colorado
Yellow Jacket -- As reported earlier, the Company completed its third
vertical test well in this shale gas prospect. Well-core results to date
have had encouraging gas contents in the Gothic shale and encouraging rates
of gas through test facilities, and the Company is currently using
3-dimensional seismic data to plan one to two horizontal wells for 2008.
The Company expects to drill its first horizontal test well in the second
quarter of 2008 and plans one-to-two additional vertical test wells to
evaluate its extensive acreage holdings.
ADDITIONAL FINANCIAL INFORMATION
Guidance
As announced on January 17, 2008, guidance for the full year 2008 consists
of:
-- Oil and natural gas production of 70 to 77 Bcfe
-- Lease operating costs per Mcfe of $0.64 to $0.70
-- Gathering and transportation costs per Mcfe of $0.54 to $0.59
-- General and administrative expenses before noncash stock-based
compensation between $36 and $38 million
Credit Facility
At year-end 2007, borrowings outstanding on the Company's revolving credit
facility were $274.0 million. The Company expects its current borrowing
base of $385 million will be increased significantly based on its increased
year-end proved reserves.
FOURTH QUARTER AND YEAR-END 2007 WEBCAST AND CONFERENCE CALL
As previously announced, a webcast and conference call will be held later
this morning to discuss fourth quarter and year-end results. Please join
Bill Barrett Corporation executive management at noon eastern time/10:00
a.m. mountain time for the live webcast, accessed at
www.billbarrettcorp.com, or join by telephone by calling 800-344-0624 with
passcode 30383795. The webcast will remain available on the Company's
website for approximately 30 days, and a replay of the call will be
available through February 29, 2008 at call-in number 800-642-1687 with
passcode 30383795.
DISCLOSURE STATEMENTS
Reserve and resource disclosure:
The United States Securities and Exchange Commission permits oil and gas
companies, in their filings with the SEC, to disclose only proved reserves
that a company has demonstrated by actual production or conclusive
formation tests to be economically and legally producible under existing
economic and operating conditions. We use certain terms in this press
release, such as probable and possible resources, that the SEC's guidelines
strictly prohibit us from including in filings with the SEC. U.S. Investors
are urged to consider closely the disclosure in our Form 10-K, for the
year-ended December 31, 2007, to be filed on or about February 26, 2008,
and other filings with the SEC, available from Bill Barrett Corporation at
1099 18th Street, Suite 2300, Denver, CO 80202. You can also obtain these
forms from the SEC by calling 1-800-SEC-0330 or at www.sec.gov
Forward-looking statements:
This press release contains forward-looking statements, including
statements regarding projected results and future events. In particular,
the Company is providing "2008 Guidance," which contain projections for
certain 2008 operational and financial results. These forward-looking
statements are based on management's judgment as of this date and include
certain risks and uncertainties. Please refer to the Company's Annual
Report on Form 10-K for the
year-ended December 31, 2007, to be filed with the Securities and Exchange
Commission on or about February 26, 2008, and other filings with the SEC,
for a list of certain risk factors. Actual results may differ materially
from Company projections and can be affected by a variety of factors
outside the control of the Company including, among other things,
exploration drilling and test results, transportation, processing,
availability of third party gathering, market conditions, oil and gas price
volatility, risks related to hedging activities, the availability and cost
of services and materials, the ability to obtain industry partners to
jointly explore certain prospects, the ability to receive drilling and
other permits and regulatory approvals, surface access and costs,
uncertainties inherent in oil and gas production operations and estimating
reserves, unexpected future capital expenditures, competition, risks
associated with operating in one major geographic area, the success of Bill
Barrett Corporation's risk management activities, governmental regulations
and other factors discussed in the Company's reports filed with the SEC.
Bill Barrett Corporation encourages readers to consider the risks and
uncertainties associated with projections. In addition, the Company assumes
no obligation to publicly revise or update any forward-looking statements
based on future events or circumstances.
ABOUT BILL BARRETT CORPORATION
Bill Barrett Corporation (NYSE: BBG), headquartered in Denver, Colorado,
explores for and develops natural gas and oil in the Rocky Mountain region
of the United States. Additional information about the Company may be found
on its Website www.billbarrettcorp.com.
BILL BARRETT CORPORATION
Selected Operating Highlights
(Unaudited)
Quarter Ended Year Ended
December 31, December 31,
----------------- -----------------
2007 2006 2007 2006
======== ======== ======== =======Production Data:
Natural gas (MMcf) 16,497 12,973 57,678 47,928
Oil (MBbls) 123 198 586 696
Combined volumes (Mmcfe) 17,235 14,161 61,194 52,104
Daily combined volumes (MMcfed) 187 154 168 143
======== ======== ======== =======Average Prices (includes effects of
hedges)
Natural gas (per Mcf) $ 5.97 $ 6.02 $ 5.89 $ 6.40
Oil (per Bbl) 66.57 50.00 59.87 53.50
Combined (per Mcfe) 6.19 6.21 6.13 6.60
======== ======== ======== =======Average Costs (per Mcfe):
Lease operating expense $ 0.51 $ 0.58 $ 0.68 $ 0.57
Gathering and transportation
expense 0.46 0.29 0.38 0.30
Production tax expense 0.45 0.33 0.37 0.50
Depreciation, depletion and
amortization 2.73 2.91 2.87 2.69
General and administrative expense,
excluding stock-based
compensation 0.56 0.50 0.52 0.53
BILL BARRETT CORPORATION
Consolidated Statements of Operations
(Unaudited)
Quarter Ended Year Ended
December 31, December 31,
-------------------- --------------------
2007 2006 2007 2006
========= ========= ========= ======== (in thousands, except per share amounts)
========= ========= ========= ========Operating and Other Revenues:
Oil and gas production $ 106,762 $ 87,948 $ 374,956 $ 344,127
Other 2,220 2,584 15,314 31,202
--------- --------- --------- ---------
Total operating and other
revenues 108,982 90,532 390,270 375,329
========= ========= ========= ========Operating Expenses:
Lease operating expense 8,711 8,246 41,643 29,768
Gathering and
transportation expense 7,898 4,193 23,163 15,721
Production tax expense 7,828 4,634 22,744 25,886
Exploration expense 1,993 2,132 8,755 9,390
Impairment, dry hole costs
and abandonment expense 14,841 637 25,322 12,824
Depreciation, depletion and
amortization 47,126 40,235 172,054 138,549
General and administrative
(1) 9,599 7,057 32,074 27,752
Non-cash stock-based
compensation (1) 3,212 1,691 10,154 6,491
--------- --------- --------- ---------
Total operating expenses 101,208 68,825 335,909 266,381
========= ========= ========= ========Operating income 7,774 21,707 54,361 108,948
========= ========= ========= ========Other Income and Expense:
Interest and other income 667 639 2,391 2,527
Interest expense (4,061) (2,831) (12,754) (10,339)
--------- --------- --------- ---------
Total other income and
expense (3,394) (2,192) (10,363) (7,812)
========= ========= ========= ========Income before Income Taxes 4,380 19,515 43,998 101,136
Provision for Income Taxes 1,901 8,549 17,244 39,125
--------- --------- --------- ---------
Net Income $ 2,479 $ 10,966 $ 26,754 $ 62,011
========= ========= ========= ========Net Income Per Common Share
Basic $ 0.06 $ 0.25 $ 0.61 $ 1.42
Diluted $ 0.06 $ 0.25 $ 0.60 $ 1.40
========= ========= ========= ========Weighted Average Common Shares
Outstanding
Basic 44,170 43,834 44,050 43,695
Diluted 44,945 44,167 44,677 44,269
========= ========= ========= ========(1) Management believes the separate presentation of the non-cash component
of general and administrative expense is useful because the cash
portion provides a better understanding of its required cash for
general and administrative expenses. Management also believes that this
disclosure allows for a more accurate comparison to its peers who may
have higher or lower costs associated with equity grants.
BILL BARRETT CORPORATION
Consolidated Condensed Balance Sheets
(Unaudited)
As of As of
December 31, December 31,
------------- -------------
2007 2006
============= ============ (in thousands)
Assets:
Cash and cash equivalents $ 60,285 $ 41,322
Other current assets 71,142 97,185
Property and equipment, net 1,195,832 1,038,595
Other noncurrent assets 2,428 10,299
------------- -------------
Total assets $ 1,329,687 $ 1,187,401
============= ============ Liabilities and Stockholders' Equity:
Current liabilities $ 139,568 $ 119,795
Long-term debt 274,000 188,000
Other long-term liabilities 142,608 123,209
Stockholders' equity 773,511 756,397
------------- -------------
Total liabilities and stockholders'
equity $ 1,329,687 $ 1,187,401
============= ============ BILL BARRETT CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
Quarter Ended December Year Ended December
31, 31,
---------------------- ----------------------
2007 2006 2007 2006
---------- ---------- ---------- ----------
(in thousands)
Operating Activities:
Net income $ 2,479 $ 10,966 $ 26,754 $ 62,011
Adjustments to reconcile
to net cash provided
by operations:
Depreciation,
depletion and
amortization 47,126 40,235 172,054 138,549
Impairment, dry hole
costs and abandonment
costs 14,841 637 25,322 12,824
Deferred income taxes 1,927 8,054 17,270 38,631
Stock compensation and
other non-cash
charges 3,495 1,925 11,284 7,089
Amortization of
deferred financing
costs 130 114 482 556
Loss on sale of
properties (1,883) (2,460) (13,420) (21,335)
---------- ---------- ---------- ----------
Change in assets and
liabilities:
Accounts
receivable (24,987) (20,290) 5,900 (320)
Prepayments and
other assets 68 2,216 (875) 4,335
Accounts payable,
accrued and other
liabilities 10,883 4,663 (4,065) 3,904
Amounts payable to
oil & gas
property owners 3,480 6,919 8,276 (5,764)
Production taxes
payable (4,310) (13,579) 2,471 (3,582)
---------- ---------- ---------- ----------
Net cash provided by
operating activities $ 53,249 $ 39,400 $ 251,453 $ 236,898
========== ========== ========== =========Investing Activities:
Additions to oil and gas
properties, including
acquisitions (126,137) (62,020) (414,925) (438,476)
Additions of furniture,
equipment and other (938) (892) (4,640) (3,177)
Proceeds from sale of
properties 13,650 9,464 96,450 78,339
---------- ---------- ---------- ----------
Net cash used in
investing activities $ (113,425) $ (53,448) $ (323,115) $ (363,314)
========== ========== ========== =========Financing Activities:
---------- ---------- ---------- ----------
Proceeds from debt 67,000 8,000 164,000 151,000
Principal payments on
debt - (5,000) (78,000) (55,495)
Proceeds from sale of
common stock 1,866 2,169 5,098 4,929
Deferred financing costs
and other (391) (92) (473) (978)
---------- ---------- ---------- ----------
Net cash provided by
financing activities $ 68,475 $ 5,077 $ 90,625 $ 99,456
========== ========== ========== =========Increase (Decrease) in Cash
and Cash Equivalents 8,299 (8,971) 18,963 (26,960)
Beginning Cash and Cash
Equivalents 51,986 50,293 41,322 68,282
---------- ---------- ---------- ----------
Ending Cash and Cash
Equivalents $ 60,285 $ 41,322 $ 60,285 $ 41,322
========== ========== ========== ========= BILL BARRETT CORPORATION
Reconciliation of Discretionary Cash Flow(1) from Net Income
(Unaudited)
Quarter Ended Year Ended
December 31, December 31,
-------------------- --------------------
2007 2006 2007 2006
========= ========= ========= ======== (in thousands, except per unit amounts)
Net income $ 2,479 $ 10,966 $ 26,754 $ 62,011
Adjustments to reconcile to
discretionary cash flow (1):
Depreciation, depletion
and amortization 47,126 40,235 172,054 138,549
Impairment, dry hole costs
and abandonment expense 14,841 637 25,322 12,824
Exploration expense 1,993 2,132 8,755 9,390
Deferred income taxes 1,927 8,054 17,270 38,631
Stock compensation and other
non-cash charges 3,495 1,925 11,284 7,089
Amortization of deferred
financing costs 130 114 482 556
Gain on disposal of
properties (1,883) (2,460) (13,420) (30,534)
--------- --------- --------- ---------
Discretionary cash flow (1) $ 70,108 $ 61,603 $ 248,501 $ 238,516
========= ========= ========= ======== Per share, diluted $ 1.56 $ 1.39 $ 5.56 $ 5.39
Per Mcfe $ 4.07 $ 4.35 $ 4.06 $ 4.58
(1) Discretionary cash flow is computed as net income plus depreciation,
depletion, and amortization, impairment expenses, deferred income
taxes, dry hole costs and abandonment expenses, exploration expenses,
non-cash stock-based compensation, losses (gains) on disposals of
properties, and certain other non-cash charges. The non-GAAP measure
of discretionary cash flow is presented because management believes
that it provides useful additional information to investors for
analysis of the Company's ability to internally generate funds for
exploration, development and acquisitions. In addition, discretionary
cash flow is widely used by professional research analysts and others
in the valuation, comparison and investment recommendations of
companies in the oil and gas exploration and production industry, and
many investors use the published research of industry research
analysts in making investment decisions. Discretionary cash flow should
not be considered in isolation or as a substitute for net income,
income from operations, net cash provided by operating activities or
other income, profitability, cash flow or liquidity measures prepared
in accordance with accounting principles generally accepted in the
United States of America ("GAAP"). Because discretionary cash flow
excludes some, but not all, items that affect net income and net cash
provided by operating activities and may vary among companies, the
discretionary cash flow amounts presented may not be comparable to
similarly titled measures of other companies.
BILL BARRETT CORPORATION
Costs Incurred and Reserve Information
(Unaudited)
2007 2006 2005
======= ======= ====== ($ in millions)
TOTAL CAPITAL EXPENDITURES $ 443.7 $ 501.2 $ 347.4
Furniture, fixtures and equipment and real
estate (4.9) (3.2) (6.6)
Asset retirement obligation 1.0 6.3 10.6
------- ------- -------
TOTAL COSTS INCURRED 439.8 504.3 351.4
======= ======= ======TOTAL COSTS INCURRED DISCLOSURE
Exploration costs 250.7 224.2 218.6
Development costs 162.5 114.6 95.2
Acquisition costs:
Unproved properties 23.6 126.1 25.7
Proved properties 2.0 33.1 1.3
Asset retirement obligation 1.0 6.3 10.6
------- ------- -------
TOTAL COSTS INCURRED 439.8 504.3 351.4
less: Asset retirement obligation (1.0) (6.3) (10.6)
less: Proceeds received from JV
partners (1) (12.1) (52.5) (13.8)
less: Deferred tax component of CH4
acquisition 1.6 (36.8) -
less: Capitalized interest (1.6) (1.0) n/a
------- ------- -------
Subtotal, adjusted costs incurred (2) $ 426.7 $ 407.7 $ 327.0
======= ======= ======RESERVE ADDITIONS (Bcfe)
Extensions, discoveries and other
additions 175.7 147.7 103.0
Revisions of previous estimates based on
performance (3) 34.8 12.4 (24.7)
Revisions of previous estimates based on
price 19.4 (33.8) 7.6
Purchases of reserves in place 2.7 19.5 3.3
------- ------- -------
RESERVE ADDITIONS 232.6 145.8 89.2
======= ======= ======SALES INFORMATION
Property sales ($mm) (1) $ 84.4 $ 35.1 $ -
Sales of reserves (Bcfe) 42.2 6.2 1.1
======= ======= ======(1) The sum of proceeds from joint venture partners and property sales
equals "Proceeds from sales of properties" from the Consolidated
Statement of Cash Flows, with the exception of 2006, which includes
$9.2 million for non-cash proceeds from the Montana Overthrust sell-
down.
(2) Finding and developments cost is a non-GAAP metric commonly used in
the exploration and production industry. The calculation presented by
the Company on page 1 is the quotient of "Subtotal, adjusted costs
incurred" divided by "Reserve additions." The calculation may not be
comparable to similarly titled measures provided by other companies.
(3) At year-end 2007, the reserve revision based on performance was
primarily the result of adding increased density proved undeveloped
locations at West Tavaputs and continued improved performance of wells
drilled in the West Tavaputs and Piceance fields.
