Denver-based independent Bill Barrett Corp., which has pinned its future on finding oil and natural gas in the Rockies, on Thursday reported that production in the second quarter was 8.6 Bcfe, up from 8.1 Bcfe for the same period a year ago. However, the company reported a net loss of $15.9 million, compared with net income of $3 million in 2Q2004 after taking a noncash impairment on some of its Wind River Basin properties.
Gas production was up for the quarter to 7.8 Bcf, compared with 7.3 Bcf in 2Q2004. Oil production reached 124,000 bbl, up from 119,000 bbl. Daily combined volumes reached 94 MMcfe/d, compared with 89 MMcfe/d in 2Q2004.
“Our active drilling program continues to keep us on track to achieve significant reserve and production growth,” said COO Fredrick J. Barrett. “Although we are disappointed with the results to date at Cooper Reservoir and Talon, the success of our diversified drilling programs confirms our expectations that we will achieve our 2005 production targets and continue to generate strong cash flow.”
Bill Barrett spent $88.1 million on capital expenditures in the quarter, comprised of $10 million for the acquisition of undeveloped properties, $76.5 million for drilling, development, exploration and exploitation of natural gas and oil properties, $0.7 million for geologic and geophysical costs, and $0.9 million for equipment and other expenditures.
Most of the money was spent in the Piceance Basin ($31.4 million), where the producer spudded 24 wells. The most wells, however, were drilled in the Powder River Basin, where Bill Barrett spent $9.5 million. It also spent $17.2 million in the Wind River Basin, where three wells were drilled, and another $16.4 million in the Uinta Basin, where seven wells were drilled.
Bill Barrett current expects to drill 352 wells this year, including 19 exploration wells. The capital budget is set at $305 million, “but industrywide cost increases and accelerating certain of the company’s drilling programs may cause the company to increase the budget,” it said in a statement. At the end of the second quarter, the company had eight conventional and eight coalbed methane rigs in operation.
Although most of its drilling operations are going well, Bill Barrett said that in some areas of the Cooper Reservoir of the Wind River Basin, “infill wells are encountering depleted sands and are not recovering sufficient incremental reserves to continue the program in the Lance and Fort Union formations.” For the Cooper Reservoir, Bill Barrett recorded an impairment expense of $29.5 million. “The company will continue to assess Cooper Reservoir as a deep exploration play.”
Likewise in its Talon assets, the company said that it has drilled and completed three wells and participated in another three nonoperated wells. “The company currently has nine productive wells in Talon; however, performance of these wells has been weaker than expected.” For Talon, Bill Barrett recorded an impairment expense totaling $6.8 million. The company plans to drill another two exploratory wells before year’s end and is assessing the feasibility of horizontal drilling in the Fort Union formation.
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