DENVER, Jan. 26, 2016 /PRNewswire/ -- Bill Barrett
Corporation (the "Company") (NYSE: BBG) today provided preliminary
unaudited financial results for certain 2015 operating metrics and
an operational summary, including an update on its extended reach
lateral ("XRL") drilling program in the Northeast ("NE") Wattenberg
area of the Denver-Julesburg ("DJ") Basin with highlights that
included:
- Full-year 2015 production sales volumes of 6.6 MMBoe, exceeds
high end of guidance and was 16% above the mid-point of original
guidance
- Full-year 2015 capital expenditures of $287 million, 9% below the low-end of
guidance
- XRL completed well costs currently averaging $4.75 million, a 42% improvement over wells
drilled in the fourth quarter of 2014
- Entered 2016 with excellent liquidity of $478 million, consisting of $129 million of cash and an undrawn credit
facility
2015 Preliminary Unaudited Operating Results
Oil, natural gas and natural gas liquids production for
full-year 2015 was 6.6 million barrels of oil equivalent ("MMBoe"),
which exceeded the Company's previously announced guidance range of
6.3-6.5 MMBoe and was 16% above the mid-point of original guidance.
This was achieved despite a reduction in volumes associated with
non-core asset sales completed in the fourth quarter of 2015 in
both the DJ Basin and Uinta Oil Program ("UOP") and production
declines from the UOP that included approximately 1,000 Boe/d that
was shut-in beginning in the second quarter of 2015 for economic
reasons. Fourth quarter of 2015 production totaled 1.7 MMBoe and
was 65% oil, 20% natural gas and 15% natural gas liquids ("NGLs").
Capital expenditures ("capex") for 2015 were $287 million, which is 9% below the low end of
the Company's previously announced guidance range of $315-$325 million. This was primarily the result
of achieving additional cost savings due to efficiencies, lower
service industry costs and less spending on leasehold and
well-infrastructure items than was forecast. Full-year capex for
2015 included 43 gross/ 39.8 net operated wells in the DJ Basin,
which were primarily XRL wells, and 15 gross/ 9.6 net operated
wells in the UOP.
The Company continues to maintain a strong liquidity position
that is protected by an underlying hedge portfolio at attractive
prices. At December 31, 2015, there
was zero drawn on the Company's $375
million credit facility and $349
million in available capacity, after taking into account a
$26 million letter of credit. The
Company entered 2016 with a cash position of $129 million, resulting in total liquidity of
approximately $478
million.
Chief Executive Officer and President Scot Woodall commented, "Although 2015 presented
numerous challenges for our sector, I am pleased that we executed
on the items within our control and exceeded our operating plan on
multiple levels. This included production above the high end of
guidance, capital spending below the low end of guidance and an
improvement in operating margins. Our financial position remains
strong as we exited 2015 with $129
million of cash, an undrawn credit facility, a strong hedge
position and ample liquidity to withstand the current commodity
price environment."
"We are currently analyzing several operating scenarios for
2016; however, we expect the capital plan to be more closely
aligned with cash flow as we defer certain activity to protect our
attractive liquidity position. We maintain significant operational
flexibility with no long-term drilling or completion contracts and
minimal well commitments in 2016. We plan to provide the details of
our 2016 plan, as well as year-end 2015 reserves, in conjunction
with our 2015 financial reporting in early-March."
XRL Well Program Update
In conjunction with transitioning development of the NE
Wattenberg area to predominantly XRL wells during 2014, several
drilling and completion concepts have been utilized in early field
delineation, including wells completed with sliding sleeve and
plug-and-perf technology and varying fracture stimulation stages
and sand amounts. Since mid-2014, 52 XRL wells have been placed on
production, including 40 XRL wells that were primarily completed
utilizing the Company's standard completion practice of
plug-and-perf technology and controlled flowback. Thirteen of
the wells have a production history of greater than a year. Based
on the Company's internal estimates and reviewed by third-party
reserve engineers, the 13 XRL wells are averaging an expected
ultimate recovery ("EUR") of approximately 750 thousand barrels of
oil equivalent ("MBoe") calculated on a three-stream basis. Four of
the wells were completed using plug-and-perf technology, 55 stages
of fracture stimulation, approximately 1,000-1,250 pounds of sand
per lateral foot and controlled flowback. These wells are averaging
an EUR of 925 MBoe calculated on a three-stream basis.
Separately, 10 XRL wells that were completed within a single
drilling and spacing unit have been on production for approximately
seven months. These wells tested several concepts that included
varying amounts of smaller proppant volumes and fracture
stimulation stages and placing the laterals at closer spacing. The
wells have exhibited a production profile that is distinct from the
earlier wells. Although the wells produced hydrocarbons much
earlier in the production profile, the calculated peak oil rate was
approximately 45-50% of the rate of the 13 wells. While the
calculated oil rates were lower than initial expectations, the
Company believes this is primarily the result of the completion and
flowback design that was utilized.
Mr. Woodall continued, "We are pleased with the early time
results of our XRL drilling program as the significant geologic and
reservoir data that we have gathered continues to support our
geologic model across the entire NE Wattenberg position. More
recently we have utilized slightly modified drilling and completion
concepts as we determine the optimal drilling and completion
techniques, while balancing the cost component to capture the best
returns in the current commodity price environment. Although the
production rates of the ten most recent wells were below our
initial expectations, we believe it is a function of the drilling
and completion techniques that were employed. This is supported by
detailed analysis of the oil saturation, oil saturated pore volume,
and net footage of resistivity that confirms the resource potential
of the Niobrara formation across the NE Wattenberg position. In
addition, we have significantly improved our capital efficiency
over the past year and initiated cost reduction measures that
resulted in tangible benefits and improvements in our corporate
cost structure heading into 2016. Our operational team continues to
meet the many challenges of operating in a low oil price
environment and this is evident by a continuous improvement in
drilling days and meaningfully lower well costs for our XRL
drilling program."
An additional 17 XRL wells are currently in various stages of
ramping up to a peak oil rate. This includes two four-well
pads that have been on production for approximately five months and
a ten well pad, which includes nine XRL wells, that has been on
production for approximately two months.
The Company continues to show significant improvement in
efficiency in the NE Wattenberg area as drilling days to rig
release for XRL wells have been reduced to an average of
approximately 8 days per well, including a best-in-class well that
was drilled in approximately 6.5 days. The faster drilling times,
coupled with associated cost reductions have lowered current XRL
completed well costs to $4.75
million, which is a 42% improvement over wells drilled in
the fourth quarter of 2014.
Fourth Quarter 2015 Commodity Price and Derivative
Information
For the fourth quarter of 2015, West Texas Intermediate ("WTI")
oil prices averaged $42.18 per
barrel, Northwest Pipeline ("NWPL") natural gas prices averaged
$2.23 per MMBtu and NYMEX natural gas
prices averaged $2.27 per MMBtu. The
Company had derivative commodity swaps in place for the fourth
quarter of 2015 for 10,800 barrels of oil per day tied to WTI
pricing at $89.81 per barrel, 20,000
MMBtu of natural gas per day tied to NWPL regional pricing at
$4.13 per MMBtu and no hedges in
place for NGLs. Based on preliminary unaudited results, the Company
expects to realize a cash commodity derivative gain of $50.8 million in the fourth quarter due to
positive derivative positions. The Company expects its fourth
quarter commodity price differentials to benchmark pricing before
commodity derivative gains, related to delivery location and
quality adjustments, to approximate: oil less $6.61 price per barrel versus WTI; and natural
gas less $0.25 per thousand cubic
feet ("Mcf") compared to NWPL. The DJ Basin oil price differential
averaged $6.42 per barrel. The
Company continues to realize lower oil price differentials as
Denver-Julesburg and Uinta Basin infrastructure
expands and local pricing improves. NGL prices averaged 28% of WTI
price per barrel.
For 2016, approximately 6,772 barrels per day of oil is hedged
at an average WTI price of $80.47 per
barrel. The current value of the hedge position is approximately
$126 million.
The following table summarizes the Company's hedge positions as
of January 22, 2016:
|
Oil
(WTI)
|
|
Natural Gas
(NWPL)
|
|
|
|
|
|
|
Period
|
Volume
Bbls/d
|
Price
$/Bbl
|
|
Volume
MMBtu/d
|
Price
$/MMBtu
|
|
|
|
|
|
|
1Q16
|
7,300
|
81.65
|
|
5,000
|
4.10
|
2Q16
|
7,300
|
81.65
|
|
5,000
|
4.10
|
3Q16
|
6,250
|
79.11
|
|
5,000
|
4.10
|
4Q16 1Q17 2Q17 3Q17 4Q17
|
6,250 2,250 2,250 1,500 1,500
|
79.11 73.88 73.88 78.16 78.16
|
|
5,000 -- -- -- --
|
4.10 -- --
-- --
|
|
|
|
|
|
|
Realized sales prices
will reflect basis differentials from the index prices to the sales
location.
|
Uinta Oil Program Update
As previously disclosed, a marketing process was initiated to
divest of the Company's remaining assets in the UOP. This marketing
process has concluded; however, discussions continue with several
interested parties regarding the sale of the properties. Further
updates will be provided as warranted.
Presentation
An updated corporate presentation will be posted to the
Company's website prior to market open on Wednesday, January 27, 2016. The presentation can
be found at www.billbarrettcorp.com under the "Investor Relations"
section.
Fourth Quarter and Year-End 2015 Conference Call and
Webcast
The Company's fourth quarter and year-end 2015 financial and
operating results press release will be issued after the market
close on Tuesday, March 1, 2016. The
Company plans to host a conference call on Wednesday, March 2, 2016, to discuss the results
and management's outlook for the future (not part of this earnings
release). The call is scheduled at 10:00
a.m. Eastern time (8:00 a.m. Mountain
time). Please join the webcast conference call live or for
replay via the Internet at www.billbarrettcorp.com, accessible from
the home page. To join by telephone, call 855-760-8152
(631-485-4979 international callers) with passcode 38878862. The
webcast will remain on the Company's website for approximately 30
days and a replay of the call will be available through
March 9, 2016 at 855-859-2056 (404-537-3406 international)
with passcode 38878862.
Forward-Looking Statements
All statements in this press release, other than statements of
historical fact, may be deemed to be forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Words such as
expects, forecast, guidance, anticipates, intends, plans, believes,
seeks, estimates and similar expressions or variations of such
words are intended to identify forward-looking statements herein;
however, these are not the exclusive means of identifying
forward-looking statements.
These and other forward-looking statements in this press release
are based on management's judgment as of the date of this release
and are subject to numerous risks and uncertainties. Please refer
to the Company's Annual Report on Form 10-K for the year ended
December 31, 2014 filed with the SEC
and other filings, including our Current Reports on Form 8-K and
Quarterly Reports on Form 10-Q, all of which are incorporated by
reference herein, for further discussion of risk factors that may
affect the forward-looking statements. The Company encourages you
to consider the risks and uncertainties associated with projections
and other forward-looking statements and to not place undue
reliance on any such statements. In addition, the Company assumes
no obligation to publicly revise or update any forward-looking
statements based on future events or circumstances.
ABOUT BILL BARRETT CORPORATION
Bill Barrett Corporation (NYSE: BBG), headquartered in
Denver, Colorado, develops oil and
natural gas in the Rocky Mountain region of the United States. Additional information
about the Company may be found on its website
www.billbarrettcorp.com.
Logo - http://photos.prnewswire.com/prnh/20150317/182406LOGO
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/bill-barrett-corporation-provides-financial-and-operational-update-300210156.html
SOURCE Bill Barrett Corporation