For the first nine months of 2005, production
was 27.1 Bcfe, compared to 23.6 Bcfe in the first nine months
of 2004. The average realized price, net of hedging, was
$6.46 per Mcfe in the first nine months of 2005 compared
to $5.05 per Mcfe in the similar period of 2004. Discretionary
cash flow (1) was $114.1 million in the first nine months
of 2005, an increase of 54% over the first nine months of
2004. Net income was $0.5 million in the first nine months
of 2005, which compared to net income of $3.8 million in
the first nine months of 2004.
The Company announced encouraging results
from the Peter's Point 6-7D, its 15,349-foot exploratory
test (100% working interest) drilled into a structural closure
in the West Tavaputs area of the Uinta Basin. The well was
successfully completed in the Navajo, Entrada and Dakota
formations with a current combined initial production rate
of 11.4 MMcfed (gross). Several shallower potential pay
zones exist behind pipe. This well is the most significant
in a series of recent successes, including the exploratory
Bullfrog 14-18 that is currently producing 20 MMcfed (gross)
and the Cave Gulch 1-29 stimulation in the Muddy formation
that is currently producing 19 MMcfed (gross).
Fredrick J. Barrett, President and Chief
Operating Officer, commented, "As a Rockies-focused exploration
company, we are excited to announce significant positive
exploration results in two consecutive quarters from two
separate basins. Continued production will be necessary
to define the size of West Tavaputs deep potential, but
the results to date look promising. The results from the
Bullfrog 14-18 and the Cave Gulch 1-29 continue to give
us reason to be optimistic about the deep potential in the
Wind River Basin. We are pleased with our overall drilling
performance, which continues to generate strong production
growth in a high priced environment, leading to record cash
flow."
Operating and Drilling Update
The Company spent $86.3 million on capital
expenditures in the third quarter of 2005, which was comprised
of $3.9 million for the acquisition of properties; $77.2
million for drilling, development, exploration and exploitation
of natural gas and oil properties; $4.8 million for geologic
and geophysical costs; and $0.4 million for equipment and
other expenditures. Through the first nine months, capital
expenditures totaled $240.4 million, and $9.0 million was
received in proceeds for a net capital program of $231.4
million. The following table lists the Company's capital
expenditures by basin and wells spud for the third quarter
of 2005.
For the Quarter Ended September 30, 2005
Area Capital Expenditures (in millions) Wells spud
Piceance Basin $34.7 21
Wind River Basin 6.6 2
Uinta Basin 26.9 9
Powder River Basin 7.6 82
Williston Basin 0.5 2
Other 10.0 --
Total $86.3 116
The Company provides the following guidance
for production and expenses based on information available
at the time of this release. The guidance amounts do not
include production or operating costs that may result from
acquisitions or future successful exploration projects.
Please see the forward-looking statements disclosure at
the end of this release for a discussion of the inherent
limitations of these forward-looking statements.
Guidance: Fourth Quarter Ending Year Ending
December 31, 2005 December 31, 2005
Production:
Total Natural Gas Equivalent
(Bcfe) 11.4 - 12.4 38.5 - 39.5
Operating Costs (in millions):
Lease operating expense $6.5 - $6.7 $20.6 - $20.8
Gathering and transportation
expense $3.8 - $4.0 $12.5 - $12.7
General and administrative
expense (excluding non-cash
stock-based compensation) $6.1 - $6.5 $23.6 - $24.0
The Company currently intends to participate
in the drilling of 357 wells in 2005, including 17 exploration
wells. Through the first nine months of 2005, 241 wells
were spud. The Company's capital expenditures for 2005 are
expected to total between $310 and $320 million, net of
sales proceeds.
As of October 31, 2005, the Company had
eight conventional and four coalbed methane drilling rigs
in operation, and is providing the following update of certain
of its drilling activities.
Uinta Basin, Utah
West Tavaputs -- The Company is encouraged
by preliminary production from the recently completed Peter's
Point 6-7D (100% working interest), a 15,349-foot exploratory
well that is currently being tested. This test was drilled
into an estimated 4,800-acre structural closure delineated
by 3-D seismic and targeted the Wingate, Navajo, Entrada,
and Dakota formations. Although the Wingate was completed
as unproductive, the Navajo, Entrada, and Dakota formations
were completed and, as of October 31, 2005, flowed a combined
11.4 MMcfd (gross) into the sales line. The Company believes
there are multiple pay zones behind pipe in the Price River
(Mesaverde), Wasatch, and North Horn formations, which are
the focus of its current shallow development program in
the area. The Navajo and Entrada reservoirs are characteristically
widespread and may cover the entire area of the structural
closure. The Company believes that it has not yet drilled
the top of the structural closure. The Company is optimistic
about its 2005 development program at West Tavaputs, which
consists of fifteen wells drilled, three recompleted wells,
and four wells from last year that were completed this year.
Ten wells have been completed thus far this year with initial
production rates that ranged between 1.0 MMcfd to 4.6 MMcfd
(gross). Twelve wells are in the process of being completed.
Although the Company faces certain challenges procuring
certain materials and oilfield services, it expects to complete
the majority of the wells before the onset of winter stipulations,
which begin December 1. The Company will monitor declines
from its new well initial production rates to determine
recoverable reserves and production profile.
Based on results to date, the Company
has initiated an Environmental Impact Statement (EIS) for
full field development of the shallow and deep formations
on Federal Leases. While conducting this EIS over the next
two to three years, the Company expects to be able to drill
a yet-to-be determined number of wells, over and above the
11 locations currently approved under the Environmental
Assessment and the five locations that are not subject to
Federal environmental regulations.
Lake Canyon -- The Company recently spud
its deep Mesaverde test, the #1 DLB (75% working interest),
and expects to reach a total depth of approximately 14,500
feet in December. The Company also recently completed its
57-square-mile three component 3-D seismic survey and is
in the process of interpreting it. The Company plans to
participate in two 6,500 foot Green River formation test
wells (working interest range of 18.75% to 25%) that are
expected to spud before year end.
Piceance Basin, Colorado
Bill Barrett Corporation continues to
develop its Piceance Basin acreage with a four-rig program.
In the first ten months of 2005, the Company drilled 65
wells, of which 34 have been completed and hooked up to
a sales line at initial maximum daily rates ranging from
375 Mcfd to 2,400 Mcfd (gross). The other 31 wells are either
being completed or waiting on completion. The Company continues
to see consistent improvement in its initial production
rates as a result of optimized completion procedures. For
example, since mid-July, 17 of the 23 most recent completions
had initial test rates that exceeded 1,200 Mcfd (gross).
The Company will continue to monitor declines from its new
well initial production rates to determine recoverable reserves
and production profile. The Company has experienced increasing
delays in procuring certain completion materials and services,
which have not affected well performance, but may affect
timing of bringing production on-line.
Wind River Basin, Wyoming
Cave Gulch/Bullfrog -- The Company continues
to be encouraged by the deep potential along the Waltman
arch. The Bullfrog 14-18 produced an average of 20.1 MMcfed
(gross) in October 2005. The Cave Gulch 1-29 (70% working
interest), stimulated in the Muddy formation, continues
its strong production, having produced 15.1 MMcfed (gross)
for the month of October 2005. These two wells had first
sales in mid July and late June, respectively. The Company
is in the process of re-stimulating the Muddy formation
in the Cave Gulch 5-30 well, an offset to the Cave Gulch
1-29, and recognizes multiple deep Muddy and Frontier locations
in the Bullfrog and Cave Gulch areas. The Company currently
is drilling one Lance well.
Powder River Basin, Wyoming
Four coal bed methane (CBM) rigs are drilling
in the Palm Tree area in the southern Powder River Basin.
In the first ten months of 2005, the Company drilled 60
wells in its Palm Tree development area targeting the Big
George coals. The Company has also drilled 60 Big George
wells in the Cat Creek Unit which is in the initial stages
of dewatering. In addition, the Company has drilled 30 Big
George wells in the Dead Horse pilot with dewatering to
commence by year end. For 2005, the Company expects to participate
in the drilling of a total of 200 CBM wells.
Williston Basin, Montana and North Dakota
Red Water -- The Company recently sold
a 50% working interest in this exploratory project to an
industry partner. The Company retains a 50% working interest
and 10,287 net undeveloped acres and spud its first horizontal
test to the Bakken formation, the McCrea 11-27H, which it
expects to reach total depth by late November.
Grand River -- The first horizontal Red
River B test was recently spud, the Nygaard 41-32H (60%
working interest), and is expected to reach total depth
by early November. The Company has approximately 10,944
net undeveloped acres in this play.
Red Bank Extension -- The Company is in
the process of closing on the sale of a 40% interest in
a joint venture to explore approximately 43,850 net undeveloped
acres to an industry partner. The Company expects to drill
two commitment wells in early 2006. The Company participated
in a non-operated Bakken test, the Sigma Lee 14-23 (working
interest 6.5%), that is currently being completed.
Mondak -- The Company is participating
in a non-operated horizontal Bakken test, the McKenzie Federal
14-31H (working interest 22%), which currently is drilling.
Denver-Julesburg Basin, Colorado, Kansas,
Nebraska
The early results of two wells drilled
in the Prairie Star area in the Tri-State prospect are encouraging.
The vertical well is waiting on pipeline and the horizontal
well is waiting on fracture stimulation. The Company recently
completed more than 500 linear miles of 2-D seismic and
plans to follow up with 3-D seismic along gas anomalies
identified on the 2-D survey.
Montana Overthrust, Montana
As of October 31, 2005, the Company had
acquired a total of 144,990 net undeveloped acres in this
exploratory project. The Company has commenced an 82-square-mile
3-D seismic survey.
Conference call to discuss third quarter
results
As previously announced, a conference
call to discuss third quarter results for the Company is
scheduled for 4:30 p.m. EST (3:30 p.m. CST, 2:30 p.m. MST)
on Thursday, November 3, 2005. The call participation number
is 1-800-344-0624 in the U.S. and Canada (1-706-643-1890
outside the U.S. and Canada) and the passcode is 1270775.
Access to a live Internet broadcast will be available at
www.billbarrettcorp.com
by clicking on the link entitled "Webcasts." A webcast archive
will be made available approximately one hour after the
conference call at www.billbarrettcorp.com.
A telephonic replay will also be available approximately
two hours after the call on Thursday, November 3, 2005 and
will continue to be available through Monday, November 7,
2005. The replay telephone number is 1-800-642-1687 in the
U.S. and Canada (1-706-645-9291 outside the U.S. and Canada)
and the passcode is 1270775.
Forward-Looking Statements and Cautionary
Statements
This press release and certain statements
in the scheduled conference call are forward-looking within
the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934.
These forward-looking statements reflect Bill Barrett Corporation's
current views with respect to future events, based on what
it believes are reasonable assumptions. No assurance can
be given, however, that these events will occur. These statements
are subject to risks and uncertainties that could cause
actual results to differ materially including, among other
things, exploration results, market conditions, oil and
gas price volatility, the availability and cost of services
and materials, uncertainties inherent in oil and gas production
operations and estimating reserves, unexpected future capital
expenditures, competition, the success of Bill Barrett Corporation
risk management activities, governmental regulations and
other factors discussed in the Company's definitive prospectus
dated August 17, 2005 filed with the Securities and Exchange
Commission (www.sec.gov).
About Bill Barrett Corporation
Bill Barrett Corporation, headquartered
in Denver, explores for and develops natural gas and oil
in nine basins and the overthrust belt in the Rocky Mountain
region of the United States. Additional information about
the Company may be found on its web site www.billbarrettcorp.com
.
The following is a summary of the Company's operational and financial
highlights. The financial statements that follow are unaudited and subject to
adjustment.
Bill Barrett Corporation
Selected Operating Highlights
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Production Data:
Natural gas (MMcf) 9,287 7,389 24,813 21,449
Oil (MBbls) 136 124 386 352
Combined volumes (MMcfe) 10,101 8,130 27,126 23,558
Daily combined volumes
(Mmcfe/d) 110 88 99 86
Average Prices (includes
effects of hedges):
Natural gas (per Mcf) $6.85 $5.04 $6.34 $4.93
Oil (per Bbl) 50.35 41.72 46.04 37.06
Combined (per Mcfe) 6.98 5.22 6.46 5.05
Average Costs (per Mcfe):
Lease operating expense $0.51 $0.47 $0.52 $0.47
Gathering and
transportation expense 0.31 0.20 0.32 0.17
Production tax expense 0.84 0.64 0.79 0.63
Depreciation, depletion
and amortization 2.18 2.18 2.25 2.07
General and administrative
(excluding stock based
compensation) 0.59 0.51 0.65 0.54
Bill Barrett Corporation
Consolidated Statements of Operations
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
(in thousands, except per share amounts)
Revenues:
Oil and gas production $70,471 $42,431 $175,118 $118,873
Other 766 244 2,474 2,642
Total revenues 71,237 42,675 177,592 121,515
Operating Expenses:
Lease operating expense 5,165 3,822 14,059 11,009
Gathering and
transportation expense 3,113 1,600 8,717 4,091
Production tax expense 8,525 5,219 21,554 14,784
Exploration expense 4,152 6,469 6,817 9,282
Impairment expense -- -- 36,343 --
Dry hole costs and
abandonment expense 646 7,606 7,978 7,887
Depreciation, depletion
and amortization 21,982 17,718 60,936 48,720
General and administrative 5,965 4,114 17,520 12,685
Stock based compensation 743 327 2,221 2,564
Total operating expenses 50,291 46,875 176,145 111,022
Operating income (loss) 20,946 (4,200) 1,447 10,493
Other Income and Expense:
Interest income 343 103 1,384 231
Interest expense (734) (2,006) (1,736) (3,389)
Total other income
and expense (391) (1,903) (352) (3,158)
Income (Loss) before
Income Taxes 20,555 (6,103) 1,095 7,335
Provision for (Benefit from)
Income Taxes 7,258 (2,163) 615 3,503
Net Income (Loss) 13,297 (3,940) 480 3,832
Less Cumulative Dividends
on Preferred Stock N/A (5,049) N/A (14,387)
Net Income (Loss)
Attributable to
Common Stock $13,297 $(8,989) $480 $(10,555)
Net Income (Loss) Per
Common Share, Basic $0.31 $(6.08) $0.01 $(7.67)
Net Income (Loss) Per
Common Share, Diluted $0.30 $(6.08) $0.01 $(7.67)
Weighted Average Common
Shares Outstanding,
Basic 43,285,381 1,477,595 43,186,417 1,376,692
Weighted Average Common
Shares Outstanding,
Diluted 43,782,874 1,477,595 43,628,292 1,376,692
Bill Barrett Corporation
Consolidated Condensed Balance Sheets
(Unaudited)
As of September 30, As of December 31,
2005 2004
(in thousands)
Cash and cash equivalents $37,664 $99,926
Other current assets 69,858 37,964
Property and equipment, net 675,717 552,165
Other non current assets 10,482 6,103
Total assets $793,721 $696,158
Current liabilities $141,184 $62,106
Note payable to bank 43,000 --
Other non current liabilities 32,195 14,320
Stockholders' equity: 577,342 619,732
Total liabilities and
stockholders' equity $793,721 $696,158
Bill Barrett Corporation
Consolidated Statement of Cash Flows
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
Operating Activities:
Net Income (Loss) $13,297 ($3,940) $480 $3,832
Adjustments to reconcile
to net cash provided
by operations:
Depreciation, depletion
and amortization 21,982 17,718 60,936 48,720
Deferred income taxes 7,258 (2,163) 615 3,503
Impairment, dry hole
costs and abandonment
expense 646 7,606 44,321 7,887
Stock compensation and
other non-cash charges 698 353 2,103 2,672
Amortization of
deferred financing
costs 319 474 882 681
Gain on sale of
properties (636) (13) (2,101) (2,348)
Change in current assets
and liabilities:
Accounts receivable (15,513) 195 (10,112) (6,281)
Prepayments and other
current assets (283) (795) (653) (2,193)
Accounts payable,
accrued and
other liabilities 2,959 733 (153) (1,084)
Amounts payable to oil
and gas property owners (360) (825) 1,116 579
Production taxes payable 5,704 3,182 13,310 9,403
Net cash provided by
operating activities 36,071 22,525 110,744 65,371
Investing Activities:
Additions to oil and
gas properties (79,820) (194,275) (224,135) (274,828)
Additions of furniture,
equipment and other (447) (428) (1,852) (1,342)
Proceeds from sale of
properties 2,456 13 9,036 7,219
Net cash used in
investing activities (77,811) (194,690) (216,951) (268,951)
Financing Activities:
Proceeds from debt 66,000 209,000 66,000 254,000
Principal payments
on debt (23,000) (31,000) (23,000) (68,000)
Proceeds from sale of
common and
preferred stock 705 13 995 33,773
Offering costs -- (1,163) -- (1,163)
Deferred financing
costs and other -- (4,615) (50) (6,169)
Net cash provided by
financing activities 43,705 172,235 43,945 212,441
Increase (Decrease) in Cash
and Cash Equivalents 1,965 70 (62,262) 8,861
Beginning Cash and
Cash Equivalents 35,699 24,825 99,926 16,034
Ending Cash and
Cash Equivalents $37,664 $24,895 $37,664 $24,895
Bill Barrett Corporation
Reconciliation of Discretionary Cash Flow (1) from Net Income (Loss)
Three Months Ended Nine Months Ended
September 30, September 30,
2005 2004 2005 2004
(in thousands)
Net Income (Loss) $13,297 ($3,940) $480 $3,832
Adjustments to reconcile to
discretionary cash flow (1):
Depreciation, depletion
and amortization 21,982 17,718 60,936 48,720
Dry hole costs,
abandonments, and
impairment expense 646 7,606 44,321 7,887
Exploration expense 4,152 6,469 6,817 9,282
Deferred income taxes 7,258 (2,163) 615 3,503
Stock compensation and
other non cash items 698 353 2,103 2,672
Amortization of deferred
financing costs 319 474 882 681
Gain on sale of properties (636) (13) (2,101) (2,348)
Discretionary cash flow (1) $47,716 $26,504 $114,053 $74,229
(1) Discretionary cash flow is computed as net income plus depreciation,
depletion, amortization, impairment expenses, deferred income taxes,
exploration expenses, non-cash stock based compensation, gains on
sale 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 concerning 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 under 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.
