Bill Barrett to Acquire Powder River Basin Properties
Bill Barrett Corp. reports that it has entered into an agreement to purchase CH4 Corp. for $80 million, subject to customary adjustments for working capital changes and other matters.
CH4 has approximately 85,500 gross undeveloped acres (51,900 net undeveloped acres) in the Powder River Basin coalbed methane (CBM) play, including acreage in the Hartzog Draw area. The acquired properties are currently producing approximately 6 million cubic feet per day (net) from 163 gross producing wells. Another 128 gross wells are in progress or dewatering.
Bill Barrett Corp. estimates that proved reserves are 11 billion cubic feet (Bcf) and probable and possible reserves are 50.4 Bcf as of the effective date of the acquisition, March 1, 2006. Future development costs for these properties are estimated to be $44.5 million, of which an estimated $14.7 million will be spent in 2006.
According to Bill Barrett Corp., the acquisition should close in early May. The purchase is being funded through borrowings under the company's recently expanded $400 million
revolving credit facility.
"We are excited about the acquisition of these lower-risk CBM properties that provide us with long-term production and reserve growth and complement our portfolio of premier Rockies development and exploration projects," said Frederick J. Barrett, Bill Barrett's chairman and CEO. "This acquisition provides us with greater critical mass and efficiencies in the Powder River Basin and enhances the value of our position in the area. In addition to proved, probable, and possible reserves, we believe there may be further upside potential with multi-seam completions and the completion of secondary coals. We have all of the necessary permits and approvals to begin drilling this program immediately."
"Excluding the acquisition price, we do not plan to increase our 2006 capital budget above $350 million," Barrett added. "We plan to update our 2006 guidance with our first quarter earnings release in early May."
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