Discretionary cash flow (1), a non-GAAP measure defined below, was $71.3
million for the first quarter of 2006, compared to $31.6 million in the first
quarter of 2005. Net income for the first quarter of 2006 was $22.1 million,
compared to $3.1 million in the first quarter of 2005. Earnings per share
were $0.50 in the first quarter of 2006, compared to $0.07 in the first quarter
of 2005.
The Company also announced encouraging results from the # 1DLB, an exploration
well located in the middle of the 320-square mile Lake Canyon project area
of the Uinta Basin. This well, which was successfully completed in late April
and is in the early testing phase, had initial test rates that averaged 300
barrels of oil per day (Bopd) (gross).
Fred Barrett, Chairman and Chief
Executive Officer, commented, "We are extremely
pleased with our execution in early 2006. We had strong production growth,
particularly in the Piceance and West Tavaputs areas; we had another exploration
success in Lake Canyon; and we closed an important strategic acquisition
that enhances the value of our Powder River Basin properties. Our well performance
in the Piceance and West Tavaputs continues to improve, and we have considerably
increased our 2006 production guidance. Furthermore, we are encouraged by
receiving unprecedented approval to drill eight wells in the winter months
in West Tavaputs and currently have two shallow and one deep rig drilling
in the area. We look to continue the momentum gained in the first quarter
and remain on schedule through the year in our development and exploration
drilling programs."
Operations
In the first quarter of 2006, net capital expenditures totaled $102.4 million,
which was comprised of $11.1 million for the acquisition of undeveloped properties;
$88.1 million for drilling, development and exploration of natural gas and
oil properties; $3.4 million for geologic and geophysical costs; $0.5 million
for equipment and other expenditures; and an offset of $0.7 million received
from industry partners pursuant to joint exploration agreements. The following
table lists capital expenditures, wells spud, and production by basin for
the first quarter of 2006.
For the Quarter Ended March 31, 2006
Basin Net Capital Expenditures Wells spud Net production
(in millions) (gross) (MMcfed)
Piceance Basin $47.5 17 31
Wind River Basin 13.3 1 39
Uinta Basin 14.9 -- 50
Powder River Basin 5.3 20 19
Williston Basin 12.0 6 6
Other 9.4 -- 1
Total $102.4 44 146
The Company anticipates participating in the drilling of 492 gross wells
for the full year 2006, of which 337 are planned coalbed methane wells in
the Powder River Basin. Excluding the $80 million acquisition price for CH4
Corporation, net capital expenditures in 2006 are not expected to exceed
the $350 million net capital budget, of which approximately $105 million
is related to the Uinta Basin, $130 million to the Piceance Basin, $35 million
to the Wind River Basin, $30 million to the Powder River Basin, $30 million
to the Williston Basin, and $20 million for other budgeted items.
The Company provides the following guidance for production and certain expenses
based on information available at the time of this release and reflecting
the estimated impact of CH4's operations. Please see the forward- looking
statements disclosure at the end of this release for more discussion of the
inherent limitations of these forward-looking statements.
Guidance Second Quarter Ending Year Ending
June 30, 2006 December 31, 2006
Production:
Natural Gas Equivalent (Bcfe) 12.0 - 12.5 46.5 - 49.5
Operating Costs (in millions):
Lease operating expense $6.7 - $7.2 $27 - $29
Gathering and transportation expense $3.7 - $4.1 $16 - $18
General and administrative expense
(excluding non-cash stock-based
compensation) $6.0 - $6.5 $26 - $28
Operating and Drilling Update
Uinta Basin, Utah
West Tavaputs (shallow) -- The Company's North Horn/Mesaverde well performance
continues to exceed expectations. Initial production (IP) rates generally
range between 2 and 5 MMcfed (gross) with estimated ultimate recoveries up
to 3 Bcfe per well. Production in the area is slightly constrained due to
limited compression; however, facility upgrades are expected in the second
and third quarters of 2006. The Company plans to drill 25 North Horn/Mesaverde
wells in 2006, primarily in the Prickly Pear area. Two rigs are currently
operating in the area.
West Tavaputs (deep) -- Two Navajo formation wells offsetting the successful
Peter's Point 6-7D are planned for 2006, the first of which is currently
drilling. The Peter's Point 6-7D is currently producing in excess of 5 MMcfed
(gross), which is consistent with its forecast decline curve. The Company
has a 100% working interest in most of the area.
Lake Canyon (shallow) -- The Company and its industry partner are optimistic
about the viability of expanding production from the Green River formation
based on the results to date from the two 2005 discovery wells (18.75% working
interest). Four additional wells are planned for mid-2006, with the possibility
of an additional 10 wells drilled by year end.
Lake Canyon (deep) -- The Company produced oil in its #1 DLB well (75% working
interest) at initial test rates that averaged 300 Bopd (gross) with a 9%
water cut and associated gas. Sustained production over several months is
needed in order to better quantify the magnitude of this discovery. The Company
controls over 150,000 net acres in the area and plans two additional exploratory
tests in 2006.
Piceance Basin, Colorado
The Company continues to be encouraged by the improvement in its well performance
in the basin after enhancements to its completion techniques and increased
operational efficiencies. IP rates now typically range between 1 and 3 MMcfed.
Production in the area is currently constrained due to compressors operating
at maximum volumes. Additional compression is scheduled to be installed in
the second and third quarters of 2006. The Company plans to drill 61 gross
(51 net) wells in 2006 in the Piceance Basin.
Powder River Basin, Wyoming
As previously announced, Bill Barrett Corporation closed on its acquisition
of CH4 Corporation on May 8, 2006. The Company plans to participate in the
drilling of 337 gross wells in 2006 (including additional wells on the acquired
properties), primarily targeting Big George coals in the Hartzog Draw, Willow
Creek, Pumpkin Creek, and Deadhorse areas.
Wind River Basin, Wyoming
The Bullfrog 33-19 well, an offset to the successful Bullfrog 14-18, is
targeting the Frontier, Muddy, and Lakota formations, and it is expected
to reach total depth of approximately 19,500 feet on May 9. The deep rig
that is drilling the Bullfrog 33-19 will then move to drill a 16,500-foot
well in the Cooper Reservoir area to test the same formations. The Company
recently sold a 50% working interest in the Cooper Reservoir area to industry
partners.
Williston Basin, Montana and North Dakota
In 2006, the Company intends to drill 15 wells in the Williston.
Red Bank Extension -- The Company recently completed two wells in the Ratcliffe
formation in the Red Bank Extension area that currently are being tested.
Red Bank/Target -- The Company recently completed three wells, one of which
is producing at an IP of 170 Bopd (gross) and the other two of which are
testing. Working interests in this area range between 85% and 100% in the
area.
Denver-Julesberg Basin (Tri-State), Colorado, Kansas, Nebraska
The seven wells drilled last year in the Prairie Star project area are currently
producing approximately 260 Mcfed (gross) in total. Bill Barrett Corporation
and its industry partner have recently completed four 3-D seismic surveys
covering a total of 62 square miles, and plan to drill 26 gross wells based
on the results from these surveys.
Earnings Conference Call
As previously announced, a conference call to discuss first quarter results
is scheduled for 4:30 p.m. EDT (3:30 p.m. CDT, 2:30 p.m. MDT) on Tuesday,
May 9, 2006. 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 8218412. Access to a live Internet broadcast will be available at www.billbarrettcorp.com by
clicking on the link titled "Webcasts." A telephonic replay will be available
approximately two hours after the conference call and will continue to be
available through Thursday, May 11, 2006. 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 8218412. A webcast archive also will be made
available approximately one hour after the conference call. The web archive
can be accessed at www.billbarrettcorp.com until
the Company's annual meeting on May 17, 2006.
Webcast of Company Presentation at the Annual Meeting
The Company will hold its annual meeting on May 17, 2006 at 9:30 a.m. MDT
in Denver, Colorado. Access to a live Internet broadcast of the annual meeting
will be available at www.billbarrettcorp.com by
clicking on the link titled "Webcasts."
Forward-Looking Statements
This press release is 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, the ability to obtain industry
partners to jointly explore certain prospects, the ability to receive drilling
and other permits, surface access and costs, 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 Form 10-K dated December 31, 2005 filed with the SEC.
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 our operational and financial highlights.
The financial statements that follow are unaudited and subject to adjustment.
Bill Barrett Corporation
Selected Operating Highlights
(Unaudited)
Quarter Ended March 31,
2006 2005
Production:
Natural gas (MMcf) 12,204 7,713
Oil (MBbls) 156 126
Combined volumes (MMcfe) 13,140 8,469
Daily combined volumes (MMcfe/d) 146 94
Average Prices (net of the effect of hedges):
Natural gas (per Mcf) $7.34 $5.87
Oil (per Bbl) 50.62 42.69
Combined (per Mcfe) 7.42 5.98
Average Costs (per Mcfe):
Lease operating expense $0.52 $0.53
Gathering and transportation expense 0.30 0.32
Production tax expense 0.63 0.78
Depreciation, depletion and amortization 2.34 2.33
General and administrative (excluding
non-cash stock-based compensation) 0.52 0.67
Bill Barrett Corporation
Consolidated Statements of Operations
(Unaudited)
Quarter Ended March 31,
2006 2005
(in thousands, except
per share amounts)
Revenues:
Oil and gas production $97,498 $50,685
Other 276 1,221
Total revenues 97,774 51,906
Operating Expenses:
Lease operating expense 6,822 4,481
Gathering and transportation expense 3,951 2,723
Production tax expense 8,254 6,610
Exploration expense 3,284 1,981
Dry hole costs and abandonment expense 144 4,685
Depreciation, depletion and amortization 30,767 19,777
Non-cash stock-based compensation 1,628 700
General and administrative 6,866 5,677
Total operating expenses 61,716 46,634
Operating Income 36,058 5,272
Other Income and Expense:
Interest income and other income 646 539
Interest expense (1,468) (506)
Total other income and expense (822) 33
Income before Income Taxes 35,236 5,305
Provision for Income Taxes 13,102 2,251
Net Income $22,134 $3,054
Net Income Per Common Share:
Basic $0.51 $0.07
Diluted $0.50 $0.07
Weighted Average Common Shares Outstanding:
Basic 43,575,465 43,084,742
Diluted 44,066,176 43,722,495
Bill Barrett Corporation
Consolidated Condensed Balance Sheets
(Unaudited)
As of March 31, As of December 31,
2006 2005
(in thousands)
Cash and cash equivalents $34,922 $68,282
Other current assets 58,202 73,036
Property and equipment, net 815,613 745,948
Other non current assets 2,183 1,679
Total assets $910,920 $888,945
Current liabilities $95,966 $132,798
Note payable to bank 88,000 86,000
Other noncurrent liabilities 50,195 39,364
Stockholders' equity 676,759 630,783
Total liabilities and
stockholders' equity $910,920 $888,945
Bill Barrett Corporation
Consolidated Statements of Cash Flows
(Unaudited)
Quarter Ended March 31,
2006 2005
(in thousands)
Operating Activities:
Net Income $22,134 $3,054
Adjustments to reconcile to net cash
provided by operations:
Depreciation, depletion and amortization 30,767 19,777
Deferred income taxes 13,102 2,251
Exploratory dry holes and abandonments 144 4,685
Stock compensation and other
non-cash items 1,792 672
Amortization of deferred financing costs 229 282
Gain on sale of properties (139) (1,094)
Change in current assets and liabilities:
Accounts receivable 14,649 6,270
Prepayments and other current assets (215) 502
Accounts payable and accrued liabilities (7,829) (179)
Amounts payable to oil and gas
property owners (10,976) 2,085
Production taxes payable 2,428 3,404
Net cash provided by operating
activities 66,086 41,709
Investing Activities:
Additions to oil and gas properties,
including acquisitions (101,217) (57,939)
Additions of furniture, equipment and other (720) (540)
Proceeds from sale of properties 818 5,528
Net cash used in investing activities (101,119) (52,951)
Financing Activities:
Proceeds from debt 11,000 --
Principal payments on debt (9,000) --
Proceeds from sale of common and
preferred stock 393 149
Deferred financing costs and other (720) (89)
Net cash provided by financing
activities 1,673 60
Decrease in Cash and Cash Equivalents (33,360) (11,182)
Beginning Cash and Cash Equivalents 68,282 99,926
Ending Cash and Cash Equivalents $34,922 $88,744
Bill Barrett Corporation
Reconciliation of Discretionary Cash Flow(1) from Net Income
(Unaudited)
Quarter Ended March 31,
2006 2005
(in thousands)
Net Income $22,134 $3,054
Adjustments to reconcile to discretionary
cash flow(1):
Depreciation, depletion and amortization 30,767 19,777
Deferred income taxes 13,102 2,251
Exploration expense 3,284 1,981
Dry hole costs and abandonment expense 144 4,685
Stock compensation and other non- cash items 1,792 672
Amortization of deferred financing costs 229 282
Gain on sale of properties (139) (1,094)
Discretionary cash flow (1) $71,313 $31,608
(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 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 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.
