Metrics indicate price above average
Bill Barrett Corporation (ticker: BBG) announced the sale of its Uinta Basin assets, transitioning to a pure-play DJ Basin player.
The assets sold produced about 2,330 BOEPD, 91% of which was oil, in Q3. In total, Bill Barrett owns about 24,000 net acres in the Uinta, with reserves of about 12 MMBOEPD. The company will receive about $110 million in cash proceeds, with expected closing before the end of the year. The buyer was not disclosed.
Based on the purchase price, Bill Barrett received $9.16 per BOE of reserves and 47,210 per BOEPD. The valuation is above the 2017 average of $8.61 per BOE reserves and above the average of $38,700 paid for production. These premiums are likely due to the high oil cut in the Uinta, as 91% oil is significantly above most other U.S. plays.
Bill Barrett CEO and President Scot Woodall commented, “This sale transitions us into a pure-play Denver-Julesburg(“DJ”) basin company, further streamlines our operational cost structure and strengthens our balance sheet and liquidity. We have a top-tier oil position in the DJ Basin with our 2017 capital program underpinning a strong growth profile in 2018 as we expect to generate greater than 30% growth from our Northeast Wattenberg assets. We anticipate that our 2018 capital program will be fully funded as we exit 2017 with a significant cash position and an improved leverage ratio.”
Bill Barrett owns about 72,000 net acres in the DJ basin, where it is producing 18.5 MBOPD. The company is focusing on extended reach lateral development, and is testing increasing proppant concentrations and frac stages. The company expects to grow production 21% in 2017, with further growth in 2018.
