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| 8-K - 8-K - BILL BARRETT CORP | bbg-04062017x8kxwrap.htm |
BOARD OF DIRECTORS
Jim W. Mogg, Chairman of the Board,
Past Chairman of DCP Midstream Partners
William F. Owens, Former Governor of Colorado
Edmund P. Segner, Past President and Chief of Staff
of EOG Resources, Inc.
Randy I. Stein, Tax, Accounting and Business Consultant,
Former Principal of PricewaterhouseCoopers LLP
Michael E. Wiley, Past Chairman and Chief Executive Officer
of Baker Hughes Incorporated
OFFICERS
R. Scot Woodall, Chief Executive Officer and President
Terry R. Barrett, Senior Vice President—Geosciences
William M. Crawford, Senior Vice President—Treasury and Finance
David R. Macosko, Senior Vice President—Accounting
Troy L. Schindler, Senior Vice President—Operations
William K. Stenzel, Senior Vice President—Corporate Development
and Planning
Kenneth A. Wonstolen, Senior Vice President—General Counsel
Duane J. Zavadil, Senior Vice President—EH&S, Regulatory and
Government Affairs
Michelle Vion Choka, Vice President—Human Resources
Jerry D. Vigil, Vice President—Information Technology
CORPORATE INFORMATION
Corporate Office
1099 18th St., Suite 2300
Denver, Colorado 80202
Telephone: 303-293-9100
Fax: 303-291-0420
www.billbarrettcorp.com
Investor Relations
Larry C. Busnardo
Senior Director—Investor Relations
lbusnardo@billbarrettcorp.com
Annual Shareholders’ Meeting
Our Annual Shareholder’s Meeting will be held
At 8:30 a.m. (MDT) on Tuesday, May 16, 2017
Bill Barrett Corporation, Corporate Headquarters
1099 18th St., Suite 2300
Denver, CO 80202
Transfer Agent
Computershare Trust Company, N.A.
211 Quality Circle, Suite 210
College Station, TX 77845
www.computershare.com/investor
Independent Auditors
Deloitte & Touche LLP
Denver, Colorado
Independent Reservoir Engineers
Netherland, Sewell & Associates, Inc.
Dallas, Texas
DISCLOSURE STATEMENTS
Please reference the accompanying Form 10-K for the year-ended December 31, 2016, as well as current reports on Form 8-K and quarterly
reports on Form 10-Q, for further information regarding the following disclosures. SEC filings are posted to the Company’s website at
www.billbarrettcorp.com.
Forward-Looking Statements
This report contains forward-looking statements. All statements other than statements of historical fact are forward-looking statements. A number
of potential risks and uncertainties could cause actual results to differ materially from projections and expectations. Please see the “Cautionary Note
Regarding Forward-Looking Statements” and “Risks Related to the Oil and Natural Gas Industry and our Business” in the accompanying 10-K.
Non-GAAP Measures
Non-GAAP measures included herein included Adjusted Earnings (Loss), Discretionary Cash Flow, Pre-Tax PV10, and General and Administrative
Expenses before Long-Term Cash and Equity Incentive Compensation. These measures are included because management believes they are useful
to investors in evaluating the Company’s operating performance. These measures are widely used in the oil and natural gas industry. Calculations
of these measures may differ by company. Please refer to the Company’s fourth quarter and full year earnings releases dated March 2, 2017 and
March 1, 2016 for reconciliations of these measures to the closes GAAP measure.
ANNUAL REPORT 2016
Bill Barrett 2016 ARss 3/9/17 3:25 PM Page 1
Over the past several years, we transitioned our
business portfolio from Rocky Mountain natural gas and
exploration to an oil focused growth strategy with assets
primarily concentrated in the Denver-Julesburg (“DJ”)
Basin of Colorado. This narrowed our operational footprint
and positioned us within a top-tier, economic basin, while
affording us a multi-year inventory of economic drilling
locations providing significant growth opportunities
in the coming years. In tandem with this endeavor, we
significantly improved our financial position with an
approximate 50% reduction in net long-term debt since
2012. This was primarily accomplished through the sale
of non-core assets that were no longer considered to be
pivotal components of our long-term strategy. Overall,
this was a tremendous accomplishment that was achieved
during a challenging commodity price environment.
When I wrote to you a year ago, West Texas
Intermediate (“WTI”) crude oil had bottomed near $26
per barrel, but was beginning to show the early signs of
a recovery. As of today, oil is above $50 per barrel and
demonstrating stability as analysts are calling for a more
constructive fundamental outlook. As I look back at our
accomplishments for 2016, I’m proud of the fact that our
organization responded positively to the challenges we
faced. We maintained a disciplined business approach,
achieved tangible benefits from resetting our operating
and corporate cost structure and preserved the flexibility
of our capital structure. Furthermore, we generated best
in class operating margins relative to our DJ Basin peers
and were cash flow positive as capital spending was below
cash flow from operations. We successfully navigated this
period and have emerged a stronger company and in a
better position to succeed going forward.
Our mantra for 2016 was to execute on the items
within our control. This strategy served us well as we
maintained positive operational momentum throughout
the year and achieved numerous successes, including:
I Production sales volumes of 6.1 MMBoe, which
were 11% above 2015 when excluding sales
volumes associated with properties that were sold
and despite capital expenditures being 66% below
2015 spending levels
I Capital expenditures of $98 million were below
cash flow from operations, a feat that was
accomplished by very few companies during 2016
I Extended reach lateral (“XRL”) well costs averaged
$4.25 million per well, a 24% improvement over
wells drilled during the second half of 2015
I Reduced lease operating expense per Boe by 29%
as compared to 2015
I Reduced cash general & administrative expense on
a per Boe basis by 24% compared to 2015
I Reduced DJ Basin oil price differentials versus the
WTI price by 58% compared to 2015
I Entered 2017 with a solid financial position
consisting of $276 million of cash and an undrawn
credit facility of $300 million
Operationally, we continued to see consistent results
across our acreage as we incorporated enhanced comple-
tion concepts that we believe will translate into improved
well performance and recovery going forward. Based on
current well cost assumptions, our XRL drilling program
generates attractive economic returns in the current
commodity price environment. We resumed our XRL drilling
program during the third quarter of 2016 after taking a
break for two quarters as oil prices bottomed. We recently
announced the addition of a second drilling rig as we look
to accelerate development of our DJ Basin asset. We are
pursuing additional capital efficiency measures designed
to improve well costs and further enhance economic
returns. We believe that this is an effective strategy that
will create value for our shareholders over the long term.
As we look at 2017, we plan to prudently allocate
capital to our asset portfolio, while managing our liquid-
ity and financial flexibility. We have established a capital
budget range of $255-$285 million. Given the attractive
economics and opportunity set that we possess, the bulk
of our spending will be allocated to the DJ Basin. This will
allow us to operate a two-rig program and drill approxi-
mately 70-75 gross wells. Importantly, the bulk of our
acreage position is largely held by production, which
allows us to maintain operational flexibility.
We entered 2017 with a meaningful cash position
of $276 million and an undrawn credit facility of $300
million. Our balance sheet is protected by an underlying
hedge portfolio covering approximately 60-65% of our
2017 oil production at a WTI price of approximately
$59.00 per barrel.
In closing, I would like to commend our employees
for their hard work and dedication during a challenging
period. On behalf of the Board of Directors, we sincerely
appreciate your investment and interest in Bill Barrett
Corporation and I look forward to continued success in
2017 and in the years to come.
Sincerely,
R. SCOT WOODALL
Chief Executive Officer and President
April 4, 2017
FELLOW SHAREHOLDERS OPERATING STATISTICS
Proved Reserves and Acreage 2016 2015 2014
Oil, MMBbls 31.1 55.5 83.8
Natural Gas, Bcf 76.2 98 154
NGLs, MMBbls 11.1 11.9 12.8
Oil Equivalents, MMBoe 55 84 122
Percent Developed 66% 48% 34%
Pre-Tax PV-10, millions $ 329 $ 328 $ 1,484
Net Acreage, rounded 254,000 349,000 580,000
Production
Oil, MMBbls 3.9 4.4 4.0
Natural Gas, Bcf 7.2 7.8 21.7
NGLs, MMBbls 1.0 0.9 1.5
Oil Equivalents, MMBoe 6.1 6.6 9.1
Average Daily Production, MBoe/d 16.6 18.1 25.0
Percent Oil 64% 67% 44%
Operating Statistics
Capital Expenditures, millions $ 98 $ 287 $ 569
Producing Wells, gross/net 431/287 536/315 768/462
Wells Drilled, gross/net 26/23 82/50 94/73
Lease Operating Expenses and Gathering,
Transportation and Processing, per Boe $ 4.97 $ 7.01 $ 10.51
Production Taxes, per Boe $ 1.75 $ 1.85 $ 3.44
G&A, per Boe (including long-term cash
and equity incentive compensation of $1.96, $1.64
and $1.25, per Boe, respectively) $ 6.92 $ 8.17 $ 5.86
Depletion, Depreciation and Amortization, per Boe $ 28.18 $ 31.14 $ 25.88
Average Realized Prices
Oil Prices, including hedge effect, per Bbl $ 62.56 $ 78.19 $ 79.51
Natural Gas, including hedge effect, per Mcf $ 2.46 $ 3.75 $ 4.45
NGL Prices, including hedge effect, per Boe $ 13.15 $ 12.16 $ 31.51
Combined, per Boe $ 44.98 $ 58.27 $ 50.73
Bill Barrett 2016 ARss 3/9/17 3:26 PM Page 3