Bill Barrett Corp.'s Production, Losses Rise in 2004

While Bill Barrett Corp. in 2004 recorded a 73% increase in oil and natural gas production over 2003, the Denver-based exploration and production company also recorded a larger loss for the year due to increased exploration expenses. The young company, founded by its namesake Rockies veteran, reported a net loss of $5.3 million for the year ended Dec. 31, 2004, but was feeling no pain after netting $350 million in an initial public offering in December.

Exploration expenses for 2004 were $36.2 million, compared to $6.1 million in 2003. The company incurred a 4Q net loss of $9.1 million compared to a net loss of $1.4 million for the similar quarter in 2003. The 4Q loss included exploration expenses of $19 million compared to $2.1 million in the comparable 2003 quarter.

The company also showed a net loss of $4 million in 2003. It was founded in 2002 by Bill Barrett, who stepped down as CEO of Barrett Resources when it was sold to Williams in 2001 for approximately $2.8 billion in cash and debt assumption (see Daily GPI, May 8, 2001).

For the year, Bill Barrett Corp.'s oil and gas production was a combined 31.7 Bcfe. In 2004, the company produced 28,864 MMcf of natural gas, a sizeable increase over the 16,315 MMcf produced in 2003. The producer's average sales price in 2004 for its oil and gas production was $5.23/Mcfe, net of the effect of hedging transactions, which compares to the company's 2003 average sales price of $4.12/Mcfe, net of the effect of hedging transactions. The company noted that production revenues for full-year 2004 were $165.8 million, an increase of 120% compared to 2003.

During the fourth quarter, the producer's average realized sales price for oil and gas production in the fourth quarter 2004 was $5.76/Mcfe, net of the effect of hedging transactions, compared to an average realized sales price in the fourth quarter 2003 of $4.27/Mcfe. Fourth Quarter production revenues were $47 million, an increase of 73% compared to 4Q2003.

"Throughout 2004, we significantly increased our production as a result of our development activities," said CEO William J. Barrett. "Coupled with higher commodity prices, our increased production generated a $64 million increase in discretionary cash flow."

W. Barrett added that during 2004, the company's Wind River Basin and Powder River Basin properties contributed approximately 58% and 16% of its oil and gas production, respectively. He announced that the company's capital budget for 2005 is $276 million, of which $120 million is allocated to the development program in the Piceance Basin, along with $66 million and $56 million for exploration and development activities in the Uinta and Wind River Basins, respectively.

Fredrick J. Barrett, president of Bill Barrett Corp., added: "We achieved several milestones in 2004, including the continuing expansion of our operations, the acquisition of properties in the Piceance Basin, and our successful initial public offering in December 2004. Our IPO raised net proceeds of nearly $350 million and our year-end balance sheet was in great shape with no debt, $100 million of cash, and $200 million available under our revolving line of credit, all of which provides the financial resources for us to continue the evaluation and development of our extensive acreage position throughout the Rockies."

He noted that as of the end of 2004, the company's net undeveloped lease position was approximately 971,000 acres. "As an example of accelerating our exploration program, we recently entered into a joint seismic and drilling program with an industry partner in our Tri-State area, which included the sale of 50% of our acreage in the play for approximately $5 million," F. Barrett said. "We are implementing this joint exploration strategy in several other basins."

The company also announced that it has begun transporting a portion of its Rockies gas production on the Cheyenne Plains Co. pipeline that became operational in February 2005. The producer has a firm agreement to transport 9,000 MMBtu per day to Mid-Continent markets, which it noted are typically at higher prices than the market in the Rockies.

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