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Bill Barrett Grew Production by Nearly One-Third in 2006

Denver-based Bill Barrett Corp. grew production 32% to 52.1 Bcfe in 2006, the company said. And 4Q2006 production was 14.2 Bcfe, 15% more than 4Q2005 and 13% more than 3Q2006.

Estimated proved reserves at Dec. 31 were 428 Bcfe, a 26% increase from the previous year end. The 2006 year-end proved reserves were 88% natural gas/12% oil and 58% proved developed/42% proved undeveloped. The present value of the reserves, discounted at 10% per annum and before the impact of income taxes, was $603 million using Rockies year-end prices of $4.46/MMBtu and $61.06/bbl. In addition to proved reserves, the company estimates that, as of Dec. 31, probable and possible resources totaled 1.1 Tcfe.

"We are extremely pleased with our continued execution of our development and exploration programs, resulting in strong production and reserve growth in 2006.," said CEO Fred Barrett. "Looking forward, we expect this growth to continue over the next several years from our portfolio of development and delineation projects. In 2007, taking into account the Williston divestiture (see Daily GPI, Nov. 30, 2006), we see production growth in the 17% to 27% range. In addition over the next six months, we will be drilling tests in several key exploration projects including Yellow Jacket (Paradox), Circus (Montana Overthrust), Hook/Woodside (Uinta) and Sellers Draw (Big Horn). We have positioned ourselves well financially to pursue our growth strategy. We have a low debt to capitalization ratio and we have hedged over 50% of our 2007 natural gas production at Rockies prices with a weighted average floor of $6.04."

Guidance for 2007 is $425-450 million in capital spending; production of 58-63 Bcfe; lease operating, gathering and transportation expenses of 79-88 cents/Mcfe; and general and administrative expenses of 48-53 cents/Mcfe. Guidance amounts do not include capital expenditures, production or operating costs related to the Williston Basin properties, which are to be divested. The guidance amounts also do not include capital expenditures, production or operating costs that may result from acquisitions. The guidance for capital expenditures excludes expected proceeds from joint exploration agreements or proceeds from any divestitures.

Bill Barrett set a production record in 1Q2006 (see Daily GPI, May 10, 2006), and 2Q2006 production also saw strong gains (see Daily GPI, Aug. 9, 2006).

In the Uinta Basin in Utah Bill Barrett recently installed an additional compressor in the West Tavaputs field, which brought field compression capacity to 75 MMcf/d (gross). The company's current production capacity exceeds its compression capacity and the addition of two additional compressors is expected at the end of the first quarter, which will bring total capacity to 95 MMcf/d (gross). The company also announced it currently is drilling its second offset to its deep discovery well and expects to reach total depth in the next few weeks. Both the discovery well and its first offset are producing along their expected decline curves.

In the Piceance Basin in Colorado the company produced an average of 48 MMcfe/d in December and it recently added additional compression, bringing the total to to 75 MMcf/d (gross). The company will soon have three rigs operating in the area.

In the Paradox Basin in Colorado the company recently drilled its first two tests in the Yellow Jacket prospect, extracted core samples and is conducting detailed tests to determine the appropriate potential completion, which may occur in the next several months.

Bill Barrett also said a misclassification occurred in two rows in its Analysis of Changes in Proved Reserves in the Supplemental Oil and Gas Information in the Notes to Consolidated Financial Statements in its Form 10-K for the year ended Dec. 31, 2005. Aggregate year-end 2005 proved reserves were not affected; however, for 2005, "Extensions, discoveries and other additions" were overstated by 14.8 Bcfe, while "Revisions of previous estimates" were understated by the same amount. The company's Form 10-K for the year ended Dec. 31, 2006, which is expected to be filed on or before March 1, will reflect these amounts in the appropriate rows.

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