Berry Petroleum Co. is paying about $5 million to gain a 50% working interest in 345,000 prospective acres in the Denver Basin of eastern Colorado, western Kansas and southwestern Nebraska from Bill Barrett Corp. The two companies plan to jointly explore and develop the shallow Niobrara gas assets on the acreage, which expands the program Berry started late last year in the area.
"This acreage is located immediately east of our pending acquisition of gas assets from J-W Operating Co.," said Berry CEO Robert F. Heinemann. "It provides us with a larger footprint in what will be Berry's newest core producing asset, the Niobrara gas field."
Berry paid J-W Operating Co. $110 million in December for more than 130,000 acres of gas-rich properties, 200 miles gathering lines and compression facilities in the Niobrara fields in northeastern Colorado. Production from the J-W properties was about 9 MMcf/d, but estimated proved natural gas reserves total 87 Bcf. Heinemann predicted that production from the properties would increase more than 15% a year for the next four years.
The tri-state acreage held with Barrett increases the target area. Drilling of the initial obligatory two test wells on the Barrett acreage is scheduled to begin in the first quarter of 2005. A plan is under development to evaluate the total acreage with Bill Barrett Corp. initially conducting and operating the seismic programs and ultimately drilling the first test wells. Berry will operate the wells once production is established.
"The upside potential on the tri-state acreage complements the producing assets in Yuma County, both technically and operationally, and strengthens the probability of achieving our goal of adding significant natural gas production and reserves to Berry's asset portfolio. We are delighted to be partnering again with Bill Barrett Corp., given their proven track record of discovering and developing natural gas in this region."
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