Denver-based Bill Barrett Corp. last year grew reserves and production as it transitioned to a greater emphasis on oil and natural gas liquids over dry natural gas given weak prices for the latter, CEO Fred Barrett said Tuesday.

“We increased our proved reserves by 22%, increased our proved, probable and possible reserves by 20% and, within those metrics, increased proved oil reserves by 135% and nearly tripled proved, probable and possible oil reserves,” said Barrett. “Strong 11% production growth included a 37% increase in oil production. The transition to more oil and NGLs [natural gas liquids] was successfully achieved at our Uinta oil program (UOP) with expansion at both the vertical Wasatch-Green River and horizontal Uteland Butte programs.”

Including acquisitions in the Uinta area and Denver-Julesburg (DJ) Basin, Bill Barrett ended the year with a drilling inventory of nearly 3,500 gross locations, an increase of more than 50%, predominantly from success in the UOP.

“We are building scale and better positioning our company for long-term, low risk growth while achieving the portfolio balance that allows us to take advantage of current commodity markets that reward oil and NGLs over dry natural gas,” Barrett said. “We enter 2012 with eight of nine drilling rigs targeting oil and NGLs, focusing our capital expenditures on the highest-return programs in the face of natural gas forward strip prices at a 10-year low.”

Year-end estimated proved reserves of 1.365 Tcfe were 87% natural gas and 13% oil. Further, estimated proved reserves were 51% developed and 49% undeveloped. In addition to proved reserves, the company estimates it has probable and possible reserves of 1.679 Tcfe as of Dec. 31, 2011 for total proved, probable and possible reserves of 3.044 Tcfe. The increase in 2011 reserves primarily reflects initiating full-field development at West Tavaputs, growth in the UOP through both drilling and acquisition as well as an acquisition in the Denver-Julesburg Basin.

Estimated production for 2011 was 106.8 Bcfe and was composed of 92% natural gas and 8% oil. Estimated fourth quarter 2011 production was 29.1 Bcfe, up 20% from 24.2 Bcfe in the fourth quarter of 2010.

The company plans to spend between $900 million and $1 billion for capital expenditures in 2012 for exploration and development programs, including facilities costs. Bill Barrett said it expects to drill 370 gross development wells in 2012, which will include 175 wells at Gibson Gulch, 100 wells in the UOP, 60 wells at West Tavaputs and 15 wells in the DJ Basin Greater Wattenberg area. Capital expenditures are expected to be allocated 85% for development projects and 15% toward exploration and delineation activities. At year-end 2011 the company had 78 wells drilled to be completed during 2012.

Bill Barrett has hedges in place for about 50% of forecast 2012 production. Natural gas hedges are all tied to Rocky Mountain regional pricing. Generally, the company hedge 50-70% of production through basis at regional sales points on a forward 12-month basis.

©Copyright 2012Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.