Current BBG Stock Info

BBG adds second rig in the DJ – company likely to exit Utah, put the capital into the DJ: Crawford
Bill Barrett Corporation (ticker: BBG) reported production at the high end of its initial Q2 guidance—with cumulative volumes of 1.53 MMBOE for the second quarter. The company’s anticipated production was between 1.45 and 1.55 MMBOE. The company indicated that it achieved capital expenditures of $59 million, well beneath the company’s Q2 guidance range of $65 to $75 million.

The company also succeeded in further reducing its DJ basin oil price...

Analyst Commentary

KLR Group

We are increasing our BBG target price $1 to $8 per share due to lower operating expense. Bill Barrett’s mid-cycle capital yield of 115%-120% is below the industry median cash recycle ratio of ~140%. Our ’17 production expectation of ~6.34 Mmboe is in the upper half company guidance (6-6.5 Mmboe).
NE Wattenberg extended lateral (XRL) execution has lowered capital intensity ~30% the past two years
Bill Barrett is conducting a two-rig program and plans to drill 70-75 XRL wells (~80% WI) this year. Approximately 80% of Northwest Wattenberg acreage is suitable for XRL development.
Extended reach Niobrara B/C wells (~9,500’ laterals, 50-60 frac stages, ~1,250 lbs. of proppant per ft.) have produced ~240 Mboe the first two years and should recover ~675 Mboe for a cost of ~$4.5 million. Barrett commences gas lift within weeks after placing wells on production to improve early well performance.
Greater completion proppant intensity:
Barrett is completing a 14-well pad (four XRL, 10 medium-length laterals) in the northern area along with five-well and six-well XRL pads in the western area (~1,500 lbs. of proppant per foot, 100-140 frac stage spacing). The company is drilling an eight-well XRL pad in the central area.
Drilling inventory:
Assuming XRL development of the western half of the company’s acreage is viable and 120-acre spacing (~10,000’ laterals, ~500’ offset), Barrett has ~700 locations in Niobrara B/C and Codell with ~250 Mmboe of net resource potential (almost 10 years of drilling inventory, ~70% WI).

Morning Brief Note:
Bill Barrett reported recurring 2Q17 EPS of ($0.17), above our ($0.18) estimate due to slightly higher liquids production. Production in 2Q17 of ~1.53 Mmboe (~59% oil, ~21% gas, ~20% NGLs) was ~1% above our ~1.52 Mmboe (~58% oil, ~22% gas, ~20% NGLs) estimate and the consensus forecast. Preliminarily, we expect production to be in the upper half of 3Q/17 (1.55-1.65 Mmboe) and ’17 guidance (6-6.5 Mmboe). DJ Basin net production increased ~2% q/q to ~14.4 Mboepd and Uinta Basin net production increased ~34% to ~2.3 Mboepd (~89% oil).  


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