DENVER, CO--(Marketwire - May 06, 2008) - Bill Barrett Corporation (NYSE: BBG) today
reported first quarter 2008 operating results highlighted by:
-- Production up 28% from the prior year period to 18.2 Bcfe
-- Discretionary cash flow up 58% from the prior year period to $108.3
million, or $2.40 per diluted common share and $5.95 per Mcfe of production
-- Net income up 116% from the prior year period to $30.7 million, or
$0.68 per diluted common share
-- Successful offering of $172.5 million in convertible senior notes
providing increased financial flexibility
Chairman and Chief Executive Officer, Fred Barrett, commented:
"We are off to a record start in 2008 with significant growth in
production that has generated our highest quarterly performance to date
in terms of revenue per share, discretionary cash flow per share and
earnings per share. Our development properties continue to perform as
expected to generate on-going production growth. Our production
increase was complemented by strong Rocky Mountain regional natural gas
pricing where we realized an average $8.19 per thousand cubic feet
equivalent (Mcfe) sales price for the quarter. Better regional natural
gas pricing, we believe, is a result of generally stronger national
prices, significantly increased regional pipeline capacity from the REX
(Rockies Express - West) system that commenced operation in early
January as well as increased local demand as a result of colder
regional weather through the winter.
From our exploration portfolio, we continue to see favorable results
from our Blacktail Ridge infill oil play and the Lake Canyon extension
project. We have reached total depth at 17,554 feet at the ultra-deep
test well at West Tavaputs and will commence completion operations over
the coming weeks. We look forward to spudding our first horizontal well
in the Yellow Jacket shale gas prospect during the second quarter and
to commencing the first of up to four wells targeting Cody shale gas at
the Circus prospect during the second quarter.
This solid start puts our Company on track to deliver projected
production growth of 20% to 28% for 2008; as a result, we are
narrowing, and slightly raising the top end of, our production guidance
range to 74 to 78 Bcfe."
Production for the quarter ended March 31, 2008 was 18.2 Bcfe, representing
a 28% increase from the first quarter of 2007 and a 6% increase
sequentially. Including the effects of the Company's hedging activities,
the average sales price realized in the first quarter of 2008 was $8.19 per
Mcfe compared with $6.84 per Mcfe in the first quarter of 2007.
Discretionary cash flow (a non-GAAP measure, see page 11) was $108.3
million in the first quarter of 2008, or $2.40 per diluted common share, up
58% compared with the first quarter of 2007. The year-over-year increase
was primarily the result of the 28% increase in production and the $1.35
per Mcfe increase in the average realized price, partially offset by higher
per unit gathering, transportation and production tax expenses.
Net income was $30.7 million, or $0.68 per diluted common share, for the
first quarter of 2008 compared with $14.2 million or $0.32 per diluted
common share in the first quarter of 2007. This 116% increase in net income
is primarily a result of higher production and a higher per unit profit
margin resulting from the increased realized price and reduced lease
operating expenses.
OPERATIONS
Production, Wells Spud and Capital Expenditures
The following table lists production, wells spud and total capital
expenditures by basin for the first quarter of 2008:
First Quarter 2008
Basin Average Net Wells Capital
Production Spud Expenditures
(MMcfe/d) (gross) (millions)
----------- ----------- -----------
Uinta 80 10 $37.8
Piceance 83 30 49.9
Powder River 17 73 8.1
Wind River 20 1 7.4
Other -- 1 5.8
----------- ----------- -----------
Total 200 115 $109.0
=========== =========== ==========
First quarter 2008 capital expenditures totaled $109.0 million. The capital
budget for 2008 is narrowed to $575-$600 million from $550-$600 million, of
which the Company expects to spend approximately 80% on development at its
key assets in the Uinta, Piceance and Powder River basins, and
approximately 20% on delineation of prior discoveries and new exploration.
The Company has 11 rigs currently drilling and anticipates participating in
the drilling of 415 to 450 gross wells for the full year 2008, including
approximately 230 coalbed methane ("CBM") wells.
Operating and Drilling Update
Uinta Basin, Utah
West Tavaputs - Current net production is approximately 76 million cubic
feet per day (MMcfe/d), temporarily constrained by processing capacity
until June. On May 1, 2008, the public comment period was closed for the
Draft Environmental Impact Statement (EIS) for this property. The Company
continues to expect a record of decision during the second half of 2008.
The Company is operating one shallow drilling rig in the area and expects
to add two shallow drilling rigs after the winter stipulations period ends
in mid-May. The Company recently reached total depth at 17,554 feet at its
ultra-deep test well targeting the Pennsylvanian Weber and Mississippian
Leadville formations and expects completion results mid-summer 2008.
The West Tavaputs program continues to offer low-risk growth in the shallow
zones as well as upside opportunity through the deep potential of the east
and west structures, the untested Mancos shale gas interval and the ultra
deep zones.
At the end of the first quarter of 2008, the Company had an approximate 99%
working interest in production from 101 gross wells in its West Tavaputs
shallow and deep programs.
Blacktail Ridge/Lake Canyon – The Company currently has eight producing
Wasatch wells and two wells to be completed in the area with current
production averaging nearly 1,000 (gross) barrels of oil per day. The
Company is operating one rig and is pursuing an infill drilling strategy in
the Blacktail Ridge area and a field extension strategy to the southwest
within its Lake Canyon acreage.
Piceance Basin, Colorado
Gibson Gulch - Current net production is approximately 88 MMcfe/d. The
Piceance program continues to be a key, low-risk, high growth development
area for the Company.
The Company has four operating rigs in the area and plans to drill up to
125 development wells in 2008, the majority of which will be on 10-acre
densities. To date, 37 wells on 10-acre densities have been completed with
positive results.
At the end of the first quarter of 2008, the Company had an approximate 94%
working interest in production from 329 gross wells in its Gibson Gulch
program.
Powder River Basin, Wyoming
Coal Bed Methane (CBM) - Current CBM net production is approximately 19
MMcfe/d with capacity constrained in the Cat Creek area due to lack of
sufficient compressor capacity. The Company currently has four rigs
operating in the area and has drilled 81 of the approximate 230 CBM wells
in its 2008 program. During 2008, production is expected to gradually
increase as wells currently in the de-watering phase begin production and
as third-party infrastructure build-outs allow. At the end of the first
quarter of 2008, the Company had an approximate 69% working interest in
production from 588 gross CBM wells.
Wind River Basin, Wyoming
Cave Gulch/Bullfrog - The Company recompleted the Bullfrog 14-18 Frontier
well (63% net revenue interest/94% working interest), where strong
production continued during the quarter, and the well is currently
producing approximately 9.5 MMcfe/d. The Company has identified two similar
recompletion locations near the Bullfrog 14-18 well.
The Cave Gulch deep drilling program was initiated in February 2008 with
the spud of the 31-32 well (37% working interest) targeting the Frontier,
Muddy and Lakota formations at 17,000-19,000 feet. This well is expected to
reach total depth in early June. The Company expects to operate a one-rig
continuous program in the area to drill up to three deep wells through
2008.
Paradox Basin, Colorado
Yellow Jacket and Green Jacket - Using a dense 2-dimensional seismic grid,
the Company has identified the location of its first Gothic shale
horizontal test well (55% working interest), an offset to its initial
vertical well, which it plans to spud during the second quarter of 2008.
The Company also anticipates drilling one to three additional vertical or
horizontal test wells during 2008 to evaluate its extensive acreage
holdings in the area.
Montana Overthrust, Montana
Circus - During the second quarter of 2008, the Company will commence a
program to drill up to four vertical wells to analyze and test the Cody
shale. As reported earlier this year, gas production was established during
testing of the Cody shale at the Draco and Leviathan wells in the area.
Production from this area will be dependent upon the discovery of
commercial quantities of natural gas to support infrastructure build-out.
The Company has a 50% working interest in this potential regional resource
play.
ADDITIONAL FINANCIAL INFORMATION
Guidance
The Company is updating its 2008 full year guidance as follows:
-- Oil and natural gas production of 74 to 78 Bcfe, up from 70 to 77 Bcfe
-- Lease operating costs per Mcfe of $0.64 to $0.68, narrowed from $0.64
to $0.70
-- Gathering and transportation costs per Mcfe of $0.54 to $0.59,
unchanged
-- General and administrative expenses before noncash stock-based
compensation between $38 and $40 million, increased from $36 to $38
million
-- Capital budget narrowed to $575 to $600 million from $550 to $600
million
Commodity Hedges Update
During the first quarter of 2008, the Company had hedges in place for
approximately 75% of its natural gas production volumes and approximately
69% of its oil production volumes that resulted in an increase in natural
gas revenues of $0.3 million and a reduction in oil revenues of $2.1
million. The net effect reduced the average price received per Mcfe from
$8.29 to $8.19.
For the remaining three quarters of 2008, the Company has hedges in place
for approximately 40 Bcfe, or approximately 66% to 71% of projected
production. It is currently the Company's strategy to hedge 50% to 70% of
production through basis at regional sales points on a forward 12-month
period in order to reduce the risks associated with unpredictable future
natural gas and oil prices and to provide certainty for a portion of its
cash flow to support its capital expenditure program.
The following table summarizes swap positions as of April 30, 2008:
Natural Gas Oil
------------------------- -------------------------
Weighted
Average Swap Weighted
Volume Price (CIG or Volume Average Swap
Period (MMBtu/d) PEPL/MMBtu) (Bbls/d) Price (WTI/Bbl)
2Q08 120,000 $6.62 575 $73.84
3Q08 120,000 6.62 575 73.84
4Q08 112,707 7.08 575 73.84
1Q09 159,000 7.97 375 74.41
2Q09 119,000 6.78 375 74.41
3Q09 119,000 6.78 375 74.41
4Q09 72,587 7.19 375 74.41
In addition, the Company has hedged certain volumes with collar contracts
including: one calendar 2008 natural gas collar for 35,000 MMBtu/d at CIG
with a floor of $6.50 and ceiling of $10.00; two calendar 2008 oil collars
for 525 barrels of oil per day (Bbls/d) at WTI with a blended floor of
$70.48 and blended ceiling of $81.62; and four calendar 2009 oil collars
for 350 Bbls/d at WTI with a floor of $83.57 and a ceiling of $122.66.
Debt
During the first quarter of 2008, the borrowing base on the Company's
revolving credit facility was increased to $510 million from $385.0 million
as a result of the increased year-end proved reserves and was subsequently
reduced to $467 million after the Company issued the convertible senior
notes. At quarter-end, borrowings outstanding under the facility were
$134.0 million, providing $333.0 million in available capacity. As
previously announced, in March 2008 the Company successfully completed the
offering of $172.5 million of 5% convertible senior notes. The proceeds
from this offering were used to pay down the revolving credit facility.
FIRST QUARTER RESULTS WEBCAST AND CONFERENCE CALL
As previously announced, a webcast and conference call will be held later
this morning to discuss first quarter 2008 operating and financial 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 866-742-9716
(832-445-1682 international callers) with passcode 41973231. The webcast
will remain available on the Company's website for approximately 30 days,
and a replay of the call will be available through May 9, 2008 at call-in
number 800-642-1687 (706-645-9291 international callers) with passcode
41973231.
DISCLOSURE STATEMENTS
Forward-looking statements:
This press release contains forward-looking statements, including
statements regarding projected results and future events. In particular,
the Company is providing updated 2008 full year guidance, which contains
projections for certain 2008 operational and financial results and
forward-looking statements regarding the Company's capital expenditure
program and exploration and development activities. 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, filed with the
Securities and Exchange Commission on February 27, 2008, and other filings
with the SEC, for a description 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
March 31,
-----------------
2008 2007
======== =======Production Data:
-------- --------
Natural gas (MMcf) 17,332 13,031
Oil (MBbls) 144 190
Combined volumes (MMcfe) 18,196 14,171
Daily combined volumes (MMcfed) 200 157
======== =======Average Prices (includes effects of realized hedges)
-------- --------
Natural gas (per Mcf) $ 8.02 $ 6.68
Oil (per Bbl) 69.83 51.72
Combined (per Mcfe) 8.19 6.84
======== =======Average Costs (per Mcfe):
-------- --------
Lease operating expense $ 0.51 $ 0.62
Gathering and transportation expense 0.52 0.36
Production tax expense 0.56 0.39
Depreciation, depletion and amortization 2.80 2.89
General and administrative expense, excluding
stock-based compensation 0.58 0.51
BILL BARRETT CORPORATION
Consolidated Statements of Operations
(Unaudited)
Quarter Ended
March 31,
----------------------
2008 2007
========== ========= (in thousands, except
per share amounts)
========== =========Operating and Other Revenues:
---------- ----------
Oil and gas production $ 149,045 $ 96,882
Unrealized derivative loss (1) (1,530) -
Other 1,687 1,498
---------- ----------
Total operating and other revenues 149,202 98,380
========== ========= ========== =========Operating Expenses:
---------- ----------
Lease operating 9,301 8,840
Gathering and transportation 9,399 5,126
Production tax 10,259 5,557
Exploration 641 1,606
Impairment, dry hole costs and abandonment 1,552 3,598
Depreciation, depletion and amortization 50,957 39,073
General and administrative (2) 10,632 7,278
Non-cash stock-based compensation (2) 3,583 1,890
---------- ----------
Total operating expenses 96,324 72,968
========== =========Operating Income 52,878 25,412
========== =========Other Income and Expense:
---------- ----------
Interest and other income 472 532
Interest expense (3,626) (2,875)
---------- ----------
Total other income and expense (3,154) (2,343)
========== =========Income before Income Taxes 49,724 23,069
Provision for Income Taxes 19,016 8,885
---------- ----------
Net Income $ 30,708 $ 14,184
========== ========= ========== =========Net Income Per Common Share
Basic $ 0.69 $ 0.32
Diluted $ 0.68 $ 0.32
========== ========= ========== =========Weighted Average Common Shares Outstanding
Basic 44,279 43,932
Diluted 45,225 44,201
========== =========(1) In accordance with FAS No. 133, there is ineffectiveness associated
with a small portion of the value of hedges entered into for forward
periods due to slight differences in the delivery point and or timing
of delivery. During the First Quarter 2008, the Company recorded a
$1.5 million loss related to this ineffectiveness. This is a non-cash
charge.
(2) 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 cash required for
general and administrative expenses. Management also believes that
this disclosure allows for a more accurate comparison to the
Company's peers who may have higher or lower costs associated with
equity grants.
BILL BARRETT CORPORATION
Consolidated Condensed Balance Sheets
(Unaudited)
As of As of
March 31, December 31,
------------ ------------
2008 2007
============ =========== (in thousands)
============ ===========Assets:
-------------------------
Cash and cash equivalents $ 60,923 $ 60,285
Other current assets 108,587 71,142
Property and equipment, net 1,252,451 1,195,832
Other noncurrent assets 10,940 2,428
------------ ------------
Total assets $ 1,432,901 $ 1,329,687
============ =========== ============ ===========Liabilities and Stockholders' Equity:
------------ ------------
Current liabilities $ 215,194 $ 139,568
Notes payable under bank credit facility 134,000 274,000
Convertible senior notes 172,500 -
Other long-term liabilities 161,891 142,608
Stockholders' equity 749,316 773,511
------------ ------------
Total liabilities and
stockholders' equity $ 1,432,901 $ 1,329,687
============ =========== BILL BARRETT CORPORATION
Consolidated Statements of Cash Flows
(Unaudited)
Quarter Ended March 31,
----------------------
2008 2007
========== ========= (in thousands)
========== =========Operating Activities:
---------- ----------
Net income $ 30,708 $ 14,184
Adjustments to reconcile to net cash provided
by operations:
Depreciation, depletion and amortization 50,957 39,073
Impairment, dry hole costs and abandonment costs 1,552 3,598
Unrealized derivative loss 1,530 -
Deferred income taxes 18,906 8,885
Stock compensation and other non-cash charges 3,974 2,069
Amortization of deferred financing costs 248 112
Gain on sale of properties (172) (1,002)
---------- ----------
Change in assets and liabilities:
Accounts receivable (19,532) 958
Prepayments and other assets (3,114) (1,483)
Accounts payable, accrued and other
liabilities (3,082) (13,492)
Amounts payable to oil & gas property
owners (1,145) 4,316
Production taxes payable 4,366 1,636
---------- ----------
Net cash provided by operating activities $ 85,196 $ 58,854
========== =========Investing Activities:
---------- ----------
Additions to oil and gas properties, including
acquisitions (114,992) (87,094)
Additions of furniture, equipment and other (605) (1,432)
Proceeds from sale of properties 1,212 1,335
---------- ----------
Net cash used in investing activities $ (114,385) $ (87,191)
========== =========Financing Activities:
---------- ----------
Proceeds from debt 199,800 12,000
Principal payments on debt (167,014) -
Proceeds from sale of common stock 1,629 352
Deferred financing costs and other (4,588) (82)
---------- ----------
Net cash provided by financing activities $ 29,827 $ 12,270
========== ========= ========== =========Increase (Decrease) in Cash and Cash Equivalents 638 (16,067)
Beginning Cash and Cash Equivalents 60,285 41,322
---------- ----------
Ending Cash and Cash Equivalents $ 60,923 $ 25,255
========== ========= BILL BARRETT CORPORATION
Reconciliation of Discretionary Cash Flow(1) from Net Income
(Unaudited)
Quarter Ended March 31,
----------------------
2008 2007
========== ========= (in thousands, except
per unit amounts)
========== =========Net Income $ 30,708 $ 14,184
Adjustments to reconcile to discretionary
cash flow (1)
Depreciation, depletion and amortization 50,957 39,073
Impairment, dry hole costs and abandonment costs 1,552 3,598
Exploration expense 641 1,606
Unrealized derivative loss 1,530 -
Deferred income taxes 18,906 8,885
Stock compensation and other non-cash charges 3,974 2,069
Amortization of deferred financing costs 248 112
Gain on sale of properties (172) (1,002)
---------- ----------
Discretionary Cash Flow (1) $ 108,344 $ 68,525
========== ========= Per share, diluted $ 2.40 $ 1.55
Per Mcfe $ 5.95 $ 4.84
(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.
