Despite “solid production growth” and the “highest daily production rates to date,” Bill Barrett Corp.’s net income for the first quarter was off by one-third from the first quarter in 2006, the company reported Tuesday. Company officials blamed the disparity on Rockies natural gas prices in the two periods.

Production for 1Q2007 of 14.2 Bcfe in the quarter compared to 13.1 Bcfe in the same period last year, an 8% growth rate. The company’s daily production rate equaled 157 MMcfe/d, a 10% increase over the 2006 rate of 143 MMcfe/d. Barrett noted that its current production rate is “in line” with its 2007 guidance figures. Earnings of $14.2 million, however, were below the 22.1 million net income for 1Q2006.

Prices for Rockies gas were at the heart of the divergence between production and earnings. And according to Barrett COO Joe Jaggers, gas prices in summer 2007 will be a challenge for Rockies producers since pipelines are near capacity. He added that “pricing could be influenced by regional weather and infrastructure availability.”

The lower prices were partially offset by hedging programs. Barrett sold its gas for an average realized price of $6.84/Mcfe as compared to $7.42/Mcfe in 1Q2006.

Jaggers noted that Barrett is continuing to improve efficiency in its drilling operations in the Uinta and Piceance Basins where it is testing increased well densities. Barrett also is experiencing lower development costs and expects that the costs for drilling rigs and completion services will level out or decline for the remainder of 2007. The company expects to drill as many as 414 gross wells during 2007, including 245 coalbed methane wells. Its development projects are centered in the Piceance, Uinta and Powder River basins.

In addition to developmental work, Barrett will “continue to execute one of the most aggressive exploratory agendas for any operator in the Rocky Mountain region,” said CEO Fred Barrett. The company is budgeting $78-88 million on exploratory work for 2007. The CEO highlighted a number of exploratory projects the company has under way in the Paradox and Uinta basins as well as new projects in the Overthrust Belt of southwest Montana and the Big Horn area of north-central Wyoming.

He noted that the company is “financially poised and has the liquidity to drive stable, reliable production growth and cash flow through the balance of 2007 and into 2008.” Barrett expects to spend $425-550 million on capital expenditures in 2007.

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