Current BBG Stock Info

Colorado-based Bill Barrett Corporation (ticker: BBG) reported Q4 and year-end results today.

For the fourth quarter of 2017, the company reported a net loss of $77.8 million, or $(0.94) per diluted share. For 2017 as a whole, the company reported a net loss of $138.2 million, or $(1.80) per diluted share.

BBG entered 2018 with $314 million of cash and an undrawn credit facility of $300 million, with which the company plans to fund anticipated 2018 activity levels.

Q4/FY 2017 production

Oil, natural gas and natural gas liquids production totaled 7.0 MMBOE for 2017, meeting the mid-point of the company’s guidance range of 6.9-7.1 MMBOE.

DJ Basin production sales volumes totaled 6.2 MMBOE for 2017, or an increase of 21% compared to 2016. Production sales volumes for 2017 were weighted 60% oil, 21% natural gas and 19% natural gas liquids.

Production sales volumes for the fourth quarter of 2017 totaled 2.12 MMBOE, which is above the mid-point of the company’s guidance range of 2.0-2.2 MMBOE. This represents a 37% increase from the fourth quarter of 2016. DJ Basin production sales volumes totaled 1.94 MMBOE, an increase of 42% compared to the fourth quarter of 2016.

DJ Basin oil volumes totaled 1.1 MMBbls, an increase of 38% compared to the fourth quarter of 2016. Production sales volumes for the fourth quarter of 2017 were weighted 60% oil, 23% natural gas and 17% NGLs.

DJ Basin

  • Two drilling rigs are currently operating in the NE Wattenberg field with drilling activity focused on the southern portion of the acreage position
  • Drilling and completion costs for extended reach lateral (XRL) wells averaged approximately $4.65 million in 2017

During 2017, production sales volumes from the DJ Basin totaled 6.2 MMBOE, which represents a 23% increase over 2016. In the fourth quarter of 2017, DJ Basin production sales volumes totaled 1.94 MMBOE, which represents a 42% increase from the fourth quarter of 2016. DJ Basin oil volumes totaled 1.11 MMBbls, which represents a 38% increase from the fourth quarter of 2016.

Drilling and completion efficiencies continue to improve within the XRL well program, Bill Barrett said, that have resulted in an approximate 30% average year-over-year improvement in 2017 cycle times, leading to an increased number of stages being completed and in the amount of sand that is pumped on a daily basis.

Uinta

  • Production sales volumes averaged 1,965 BOEPD (91% oil) during the fourth quarter of 2017
  • The company completed the sale of its Uinta Basin assets for net proceeds of $102 million in December 2017
Bill Barrett

BBG Q4-FY 2017 Production Data, Feb. 2018

CapEx

Capital expenditures of $260.7 million for 2017 were at the mid-point of the company’s guidance range of $250-$270 million. Capital projects included spudding 69 gross operated XRL wells in the DJ Basin and placing 54 gross operated XRL wells on initial flowback. Completion activity was greater during the second half of the year as the company entered 2017 operating one drilling rig and added a second drilling rig in June. Capital expenditures included $226.9 million for drilling and completion operations, $20.4 million for leaseholds to expand development programs and $13.4 million for infrastructure and corporate purposes.

Capital expenditures for the fourth quarter of 2017 totaled $86.2 million, which was at the mid-point of the company’s guidance range of $80-$90 million. Capital expenditures included spudding 22 gross operated XRL wells in the DJ Basin and placing 16 gross operated XRL wells on initial flowback. Capital expenditures included $76.8 million for drilling and completion operations, $0.2 million for leaseholds and $9.2 million for infrastructure and corporate assets.

Proved reserves

Total estimated proved reserves at year-end 2017 were 85.8 MMBOE, compared to 54.9 MMBOE at year-end 2016, an increase of 56%. All-sources reserve replacement totaled 541%. The increase in estimated proved reserves compared to year-end 2016 is primarily the result of extensions and discoveries of 35.9 MMBOE, and positive commodity price-related and other revisions totaling 8.8 MMBOE – partially offset by sale of properties of 11.2 MMBOE, Bill Barrett said.

Bill Barrett

BBG Changes in Proved Reserves, Feb. 2018

Q1 2018

Capital expenditures are expected to total approximately $80-$90 million in Q1 2018 and this includes the two drilling rigs operating in NE Wattenberg. The company estimates production of 1.8-2.0 MMBOE (60% oil) during the quarter – this estimate only includes DJ Basin production volumes on the legacy NE Wattenberg acreage, Bill Barrett said, and does not include the Uinta Basin or the Fifth Creek business combination.

Bill Barrett Corporation will hold a special meeting of its shareholders to vote on the combination with Fifth Creek Energy. The combination is expected to close in March 2018. According to Bill Barrett, the merger will “materially” expand the company’s DJ Basin footprint and strengthen the company’s balance sheet.

The company said it anticipates issuing full year 2018 guidance after the Fifth Creek transaction closes.

Conference call Q&A excerpts

Q: Regarding the Fifth Creek acquisition, can you offer any color on where you stand with the 12 DUCs there at the time of the acquisition, and how your view on D&C and flowback procedures are evolving, now that your teams have had the opportunity to work with one another?

President and CEO R. Scot Woodall: Sure. So, the Fifth Creek transaction, in general, has just gone great when you think about going through the whole SEC review process, and I think we had a very expedited process along those lines, got the shareholder votes set there for the 16, so kind of in the middle of the month. So, that has gone tremendously smooth.

We’ve got the Glass Lewis report this morning in which the Glass Lewis recommends a floor vote for all of the items that our board of directors put out to the shareholders. So, we’re excited about that. So, from that whole approval process, everything seems to be on track.

Working with the Fifth Creek people has been a tremendously collaborative event as we kind of worked through putting together a business plan for 2018 as well as tackling some of the organizational issues and things. So, that has been great to work with all of those guys.

Going specifically to the DUCs that you brought up. Of the 12 DUCs, three of those were completed by Fifth Creek in December and placed on line in December of last year. The remaining nine DUCs will be done post-closing. And so, we I think have already secured services to go up there really by the end of March, beginning of April to begin the process of completing those DUCs. Similarly, I think we already have been working in a very collaborative fashion with the Fifth Creek people and have secured almost all of the permits that we need for 2018 for the Hereford position and expect to have a drilling rig up there running probably in April as well.

So, seems like it’s all on track, moving pretty smoothly. I would say that the outlook that we put in conjunction with the announcement of the transaction back in December still looks intact. Obviously, we will update that post-closing and post getting a business plan approved through our new board, and those items as well, and I look forward to sharing that with everybody. But it seems like that that outlook is still intact as we continue to work through the process.

Q: Regarding the line pressures, as you kind of get with the Fifth Creek deal, is that something that you see impacting how you plan the activity between the combined company going forward, or do you see that easing as the year goes on?

CEO Woodall: Well, kind of two points along those lines. So sure, obviously, the Fifth Creek transaction gives us a lot of flexibility, which we like that word, flexibility, whether we’re talking about balance sheet or controlling our own pace of development, is a pretty good keyword for us in this organization.

And having another outlet there, could give us the ability to allocate more capital up there and less that would flow through the DCP system. So, I think that does give us more choices and more options, and that will surely be taken into account as we look forward to putting out combined company guidance later into March.

Specifically, to the line pressures and things that we experienced, I kind of think that the worst is probably behind us.

So, we were probably more impacted in November, December and January on curtailments associated with DCP than what we see going forward. If you remember, we’ve signed another contract with another outlet for gas, and those volumes have continuously ramped up. So, we may have only moved a couple of million a day through that other third-party arrangement in November, but we’re currently moving somewhere around 7 million to 10 million a day of volume through there. And we think in April, we’ll be over 20 million a day going through that other outlet. So, we really think that we’ve got the issue kind of behind us and it did impact some of the volumes in the fourth quarter and translated into a little bit of the first half of Q1. But like I said, I kind of think that issue is more behind us. So, we look for a pretty robust year going forward.


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