DENVER, Aug. 7 /PRNewswire-FirstCall/ -- Bill
Barrett Corporation (NYSE: BBG
- News)
today reported that production for the second quarter ended
June 30, 2006 was 12.2 billion cubic feet equivalent (Bcfe),
an average of 134 million cubic feet equivalent per day
(MMcfed), which represents a 42% increase from the second
quarter of 2005. For the first six months of 2006, production
totaled 25.3 Bcfe, representing a 49% increase over the
first six months of 2005. Net of the effects of hedging,
the average sales price realized in the second quarter of
2006 was $6.42 per thousand cubic feet equivalent (Mcfe)
compared to a realized price of $6.31 per Mcfe in the second
quarter of 2005.
Discretionary cash flow (1), a non-GAAP
measure defined below, was $51.6 million for the second
quarter of 2006, compared to $34.7 million in the second
quarter of 2005. For the first six months of 2006, discretionary
cash flow (1) was $122.9 million, an 85% increase from
the previous year period. Net income for the second quarter
of 2006 was $8.2 million, compared to a net loss of $15.9
million in the second quarter of 2005. Net income for
the first six months of 2006 was $30.3 million, compared
to a net loss of $12.8 million in the previous year. Earnings
per share were $0.19 in the second quarter of 2006, compared
to a loss per share of $0.37 in the second quarter of
2005. Earnings per share were $0.70 for the first six
months of 2006, compared to a loss per share of $0.30
in the first six months of 2005.
In the Wind River Basin, the Bullfrog
33-19 exploration well (93% working interest), which was
drilled to 19,432 feet, was successfully completed in
the Lakota formation. The well, an offset to the Bullfrog
14-18 Muddy discovery, tested at rates of 5 million cubic
feet equivalent per day (MMcfed) (gross) after clean up
from its fracture stimulation and currently is producing
4 MMcfed (gross). Based on log results, the Company has
identified additional potential uphole in the Muddy and
Frontier formations, both of which are behind pipe.
Fred Barrett, Chief Executive Officer
and Chairman, commented, "We are extremely pleased with
our recent performance. We established a new deep Lakota
discovery at Bullfrog with the 33-19, closed a strategic
acquisition, and achieved our production guidance despite
curtailments. We look to carry this momentum through the
rest of the year as we execute our development and exploration
programs. The industry is facing challenges with recent
short- term natural gas price volatility, but we feel
we have positioned our portfolio of development and exploration
projects for long term sustainable growth. Meanwhile,
to ensure we maintain financial flexibility, we have added
several hedges and streamlined our 2006 planned capital
spending."
Operations
The Company also reported that its production
from the West Tavaputs area in the Uinta Basin has been
curtailed over the past few months due to construction
of gas processing facilities owned by a third party processor.
The completion of these gas processing facilities was
delayed from an expected in-service date of June 1, 2006
to August 15, 2006. Because Bill Barrett Corporation's
gas in this area is high in natural gas liquids, it does
not meet the specifications of the interstate pipeline
system and, therefore, cannot be transported at full capacity
until processing facilities are completed by the third
party processor. The Company estimates that nearly 0.5
Bcfe of Q2 2006 production was curtailed. The Company
currently is producing approximately 29 MMcfed (gross)
from the area. Prior to this curtailment in May, the Company
produced at rates as high as 49 MMcfed (gross) in West
Tavaputs.
In the second quarter of 2006, net capital
expenditures totaled $178.1 million, which was comprised
of $93.8 million for the acquisition of producing properties,
undeveloped properties and land, $89.3 million for drilling,
development and exploration of natural gas and oil properties,
$0.6 million for geologic and geophysical costs, and $0.7
million for equipment and other expenditures, which was
offset by $6.3 million received from industry partners
pursuant to joint exploration agreements. The following
table lists capital expenditures, wells spud, and production
by basin for the second quarter of 2006.
For the Quarter Ended June 30, 2006
Basin Capital Expenditures Wells spud Net production
(in millions) (gross) (MMcfed)
Piceance Basin $40.6 19 38
Wind River Basin 4.2 1 29
Uinta Basin 33.4 13 39
Powder River Basin 85.4* 33 21
Williston Basin 9.7 2 7
Other 4.8 -- 0
Total 178.1 68 134
* The capital expenditures for Powder River Basin include the
$80.3 million acquisition cost for CH4 Corporation (net of working
capital acquired), but exclude the associated non-cash deferred tax
liability of $40.7 million that was recorded in connection with this
acquisition.
The Company anticipates participating
in the drilling of up to 416 gross wells for the full
year 2006, including 259 coalbed methane ("CBM") wells.
The Company's previously announced capital budget of $350
million is net of proceeds anticipated to be received
from joint exploration partners and excludes the $80 million
cash acquisition cost for CH4 Corporation. However, the
Company currently estimates it will spend less than its
capital budget as the Company continues its efforts to
bring its capital budget in line with its operating cash
flow.
The Company reiterates its previous
guidance for 2006 production and certain expenses based
on information available at the time of this release.
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: Year Ending
December 31, 2006
Production:
Natural Gas Equivalent (Bcfe) 46.5 - 49.5
Operating Costs (in millions):
Lease operating expense $27 - $29
Gathering and transportation expense $16 - $18
General and administrative expense (excluding
non-cash stock-based compensation) $26 - $28
Operating and Drilling Update
Wind River Basin, Wyoming
Bullfrog/Cave Gulch -- The Lakota formation
was successfully completed in the Bullfrog 33-19. The
Company believes that the Muddy and Frontier formations
are prospective and are behind pipe. The Muddy formation,
based on logs, does not appear to be as well developed
as in the Bullfrog 14-18. This Lakota discovery and the
Muddy discovery in the Bullfrog 14-18 help substantiate
significant upside in a deep multi-formation program with
at least 30 identified locations.
Cooper Reservoir (deep) -- The Company
is nearing a total depth of 16,265 feet in its exploratory
test, the Cooper Deep #1 (50% working interest). Results
of the well are expected to be released within 60 days.
The Cooper Deep #1 is located approximately six miles
southwest of the successful Bullfrog 33-19 and is also
targeting the Frontier, Muddy, and Lakota formations.
Uinta Basin, Utah
Lake Canyon -- Due to the success of
the #1 DLB Wasatch discovery well, the Company plans to
increase its program by drilling four Wasatch wells in
the fourth quarter. The Company's partner expects to drill
six Green River formation wells this quarter.
West Tavaputs (deep) -- The Company
recently finished drilling the Peter's Point 4-12D well.
After reaching total depth of 15,542 feet but prior to
completion, mechanical problems were encountered that
have resulted in the loss of the lower portion of the
hole where the target pay zones are located. Based on
encouraging gas shows during drilling, the Company plans
to plug back and then sidetrack and re-drill the lower
portion of the hole. The Company expects it will be 30
to 45 days before it is able to commence completion operations.
West Tavaputs (shallow) -- The Company
has two rigs operating in the shallow program and has
spud 17 of the 24 planned wells for 2006. The Company
continues to be encouraged with the initial test rates
from its 2006 drilling program. Upon completion of third
party gas processing facilities and the installation of
additional Company-owned compressors, the Company expects
to have production capacity of 70 MMcfed (gross) by the
beginning of the fourth quarter.
Piceance Basin, Colorado
The Company continues to be encouraged
by its well performance and production growth in the Piceance.
The Company produced nearly 60 MMcfed (gross) in July.
The Company currently has two rigs operating in the area
and expects to drill 62 wells (gross) this year, of which
45 have spud.
Powder River Basin, Wyoming
Mr. Barrett added, "We are excited about
our Big George CBM portfolio, including the properties
we recently acquired from CH4. The integration has gone
smoothly, and we have been actively drilling in the Hartzog
Draw area over the past few months. In fact, we have nearly
completed this year's drilling program there. In addition,
we are actively drilling the Big George in the Palm Tree,
Dead Horse, and Cat Creek areas. We are pleased that our
planned divestiture allows us to focus our capital in
the emerging Big George play to maximize our efficiencies
and returns."
The Company recently entered into a
definitive purchase and sale agreement to sell certain
CBM properties for $30.7 million, subject to standard
closing adjustments. The transaction has an effective
date of July 1, 2006 and an expected closing by the end
of the third quarter. The Company estimates that the divested
properties have proved reserves of 7 Bcfe and net production
of 3 MMcfed. The properties, covering 17,000 net acres,
are located in the northern edge of the basin and target
Wyodak and other coal seams and were a portion of the
properties included in the CH4 Corporation acquisition
in May 2006.
Williston Basin, Montana and North Dakota
In Red Water, the McCrea 11-27H has
had encouraging oil shows from the Bakken in parts of
the wellbore, but has encountered water production that
has restricted oil flow. The Company will continue to
test the well and attempt to isolate the water source,
which is believed to be a fault cut. In the Grand River
area, the Bertsch Trust 44-19H well is testing. The well
is producing formation water without oil shows, and testing
is expected to continue over the next several months.
In the Red Bank extension area, the Miller 44-19H continues
to produce water without any oil shows and the Erickson
44-15H was plugged and abandoned. The Company recorded
dry hole expense in the second quarter of $2.9 million
for these two wells. In the Target development area, the
Company has drilled two wells that currently are each
testing at rates of approximately 75 Barrels of oil per
day (Bopd).
Hedging
The Company recently added the following natural gas swap:
Index Period Volume Price
CIG 9-10/2006 15,000 MMBtu/d $6.52
The Company recently added the following oil and natural gas cashless
collars:
Index Period Volume Floor Ceiling
CIG 2007 35,000 MMBtu/d $6.75 $9.10
WTI 2007 200 Bopd $70.00 $84.94
CIG 2008 35,000 MMBtu/d $6.50 $10.00
WTI 2008 500 Bopd $70.00 $80.15
As previously announced, a conference
call to discuss second quarter results is scheduled for
4:30 p.m. EDT (3:30 p.m. CDT, 2:30 p.m. MDT) on Tuesday,
August 8, 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 3020881. Access to a live
Internet broadcast will be available at www.billbarrettcorp.com
by clicking on the link entitled "Webcasts." A telephonic
replay will be available approximately two hours after
the conference call and will continue to be available
through Thursday, August 10, 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 3020881.
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 August 10, 2006.
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, transportation, processing, 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
reports filed with the SEC, including the Form 10-K dated
December 31, 2005.
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 Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Production:
Natural gas (MMcf) 11,119 7,813 23,323 15,526
Oil (MBbls) 176 124 332 250
Combined volumes (MMcfe) 12,175 8,557 25,315 17,026
Daily combined volumes
(MMcfe/d) 134 94 140 94
Average Prices (net of the
effect of hedges):
Natural gas (per Mcf) $6.15 $6.20 $6.77 $6.04
Oil (per Bbl) 55.70 44.73 53.31 43.70
Combined (per Mcfe) 6.42 6.31 6.94 6.15
Average Costs (per Mcfe):
Lease operating expense $0.61 $0.52 $0.56 $0.52
Gathering and
transportation expense 0.33 0.34 0.32 0.33
Production tax expense 0.54 0.75 0.58 0.77
Depreciation, depletion
and amortization 2.71 2.24 2.52 2.29
General and administrative
(excluding stock-based
compensation) 0.56 0.69 0.54 0.68
Bill Barrett Corporation
Consolidated Statements of Operations
(Unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
(in thousands, except share and per share amounts)
Operating Revenues:
Oil and gas production $78,213 $53,962 $175,711 $104,647
Other 4,407 487 4,674 1,708
Total operating
revenues 82,620 54,449 180,385 106,355
Operating Expenses:
Lease operating expense 7,371 4,413 14,193 8,894
Gathering and
transportation expense 4,067 2,881 8,018 5,604
Production tax expense 6,525 6,419 14,779 13,029
Exploration expense 641 684 3,925 2,665
Impairment expense -- 36,343 -- 36,343
Dry hole costs and
abandonment expense 6,944 2,647 7,088 7,332
Depreciation, depletion
and amortization 33,041 19,177 63,808 38,954
General and
administrative 6,877 5,878 13,743 11,555
Non-cash stock-based
compensation 1,539 778 3,167 1,478
Total operating
expenses 67,005 79,220 128,721 125,854
Operating (Loss) Income 15,615 (24,771) 51,664 (19,499)
Other Income and Expense:
Interest and other
income 580 502 1,238 1,041
Interest expense (2,884) (496) (4,355) (1,002)
Total other income
and expense (2,304) 6 (3,117) 39
Income (Loss) before
Income Taxes 13,311 (24,765) 48,547 (19,460)
Provision for (Benefit
from) Income Taxes 5,101 (8,894) 18,203 (6,643)
Net Income (Loss) $8,210 $(15,871) $30,344 $(12,817)
Net Income (Loss) Per
Common Share Basic: $0.19 $(0.37) $0.70 $(0.30)
Net Income (Loss) Per
Common Share Diluted: $0.19 $(0.37) $0.69 $(0.30)
Weighted Average
Common Shares
Outstanding, Basic 43,636,185 43,186,922 43,605,992 43,136,115
Weighted Average
Common Shares
Outstanding, Diluted 44,096,016 43,186,922 44,123,992 43,136,115
Bill Barrett Corporation
Consolidated Condensed Balance Sheets
(Unaudited)
As of June 30,
2006 2005
(in thousands)
Assets:
Cash and cash equivalents $42,102 $35,699
Other current assets 52,089 37,528
Property and equipment, net 1,002,826 617,232
Other non-current assets 2,040 14,457
Total assets $1,099,057 $704,916
Liabilities and Stockholders' Equity:
Current liabilities $104,484 $86,761
Note payable to bank 205,000 --
Other non current liabilities 100,142 21,274
Stockholders' equity 689,431 596,881
Total liabilities and stockholders'
equity $1,099,057 $704,916
Bill Barrett Corporation
Consolidated Statements of Cash Flows
(Unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
(in thousands)
Operating Activities:
Net Income (Loss) $8,210 $(15,871) $30,344 $(12,817)
Adjustments to reconcile
to net cash provided by
operations:
Depreciation, depletion
and amortization 33,041 19,177 63,808 38,954
Impairment, dry hole costs
and abandonment expense 6,944 38,990 7,088 43,675
Deferred income taxes 5,101 (8,894) 18,203 (6,643)
Stock compensation and
other non-cash items 1,666 733 3,458 1,405
Amortization of deferred
financing costs 105 281 334 563
Gain on disposal of
properties (4,137) (371) (4,276) (1,465)
Change in operating assets
and liabilities:
Accounts receivable 3,766 (869) 18,415 5,401
Prepayments and other assets 1,551 (872) 1,336 (370)
Accounts payable, accrued
and other liabilities 4,339 (2,933) (3,490) (3,112)
Amounts payable to oil and
gas property owners (542) (609) (11,518) 1,476
Production taxes payable 4,140 4,202 6,568 7,606
Net cash provided by
operating activities 64,184 32,964 130,270 74,673
Investing Activities:
Additions to oil and gas
properties (173,573) (86,376) (274,790) (144,315)
Additions of furniture,
equipment and other (840) (865) (1,560) (1,405)
Proceeds from sale of
properties 6,045 1,052 6,863 6,580
Net cash used in
investing activities (168,368) (86,189) (269,487) (139,140)
Financing Activities:
Proceeds from debt 117,000 -- 128,000 --
Principal payments on debt (6,495) -- (15,495) --
Proceeds from sale of
common and preferred stock 1,259 141 1,652 290
Deferred financing costs
and other (400) 39 (1,120) (50)
Net cash provided by
financing activities 111,364 180 113,037 240
Decrease in Cash and Cash
Equivalents (7,180) (53,045) (26,180) (64,227)
Beginning Cash and Cash
Equivalents 34,922 88,744 68,282 99,926
Ending Cash and Cash
Equivalents $42,102 $ 35,699 $42,102 $35,699
Bill Barrett Corporation
Reconciliation of Discretionary Cash Flow (1) from Net Income (Loss)
(Unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
(in thousands)
Net Income (Loss) $8,210 $(15,871) $30,344 $(12,817)
Adjustments to reconcile to
discretionary cash flow (1):
Depreciation, depletion
and amortization 33,041 19,177 63,808 38,954
Dry hole costs, abandon-
ments, and impairment
expense 6,944 38,990 7,088 43,675
Exploration expense 641 684 3,925 2,665
Deferred income taxes 5,101 (8,894) 18,203 (6,643)
Stock compensation and
other non-cash items 1,666 733 3,458 1,405
Amortization of deferred
financing costs 105 281 334 563
Gain on disposal of
properties (4,137) (371) (4,276) (1,465)
Discretionary cash flow (1) $51,571 $34,729 $122,884 $66,337
Shares outstanding (diluted) 44,096 43,187 44,123 43,136
Discretionary cash flow (1)
per share $1.17 $0.80 $2.79 $1.54
(1) Discretionary cash flow is computed as net loss plus depreciation,
depletion, amortization and impairment expenses, deferred income
taxes, exploration expenses, non-cash stock based compensation, losses
(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 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.
