Barrett Building Legacy Portfolio in Rockies

CEO Peter Dea's vision for Barrett Resources Inc. in the mid-1990s was to build the premier exploration and production company in the Rocky Mountains and to double its reserve base in three to five years. Through a solid execution plan that was only temporarily distracted with E&P in the Gulf of Mexico, Barrett has had 13% annual growth in the past six years with production standing at 350 MMcf/d -- effectively doubling its reserve base in less than three years.

Dea credited his company's success to sticking with its "core competencies." Earlier this year, the company had its proof -- offers to merge from several companies, including giant Shell Oil Co. Fighting off the takeover attempt from Shell, Barrett accepted an offer from Williams (see NGI, May 14) in a friendly merger, but will keep its Rockies operations and management team in Denver.

"Having a local regional expertise is important," Dea told a standing room only crowd last Tuesday during the morning session of the 13th Annual Rocky Mountain Natural Gas Strategy Conference in Denver. Barrett, he said, has the management, acreage and balance sheet, and sees only one problem on the horizon, like other energy companies: a lack of adequate personnel. "Technology will help...but the genius is the people."

Overall, the Rocky Mountain basin has about 388 Tcf in the ground, Dea said, and about 15% of that has been produced, leaving 330 Tcf still to be recovered. In the last nine years, he noted that coalbed methane production has accounted for 10.3 Tcf, and it "leads the way," followed by basin drilling.

"Leading the pace" is the Powder River Basin, where Barrett laid its foundation in the 1990s, and which still holds the key to the company's growth. "This legacy asset is a multi-TCF basin...a very sustainable production asset." Comparing it to the San Juan Basin, which has produced for more than 10 years, Dea said that Powder River and San Juan were nearly identical in production in their first 10 years -- 2.5 Tcf -- indicating that Powder River could "reach 20-25 Tcf in the decade ahead."

The Piceance Basin also holds "huge" gas reserves, which Dea said have hardly been tapped. Barrett's legacy assets in the Piceance were built slowly. Fifteen other companies "came and went" while Barrett plodded along, waiting for its exploration and production to pay off. It did. It now has 64 wells on its acreage there, including a 10-acre pilot recently approved. Proven reserves by the end of this year will approach 1.4 Tcf net to Williams, Dea said.

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