The Oil & Gas Conference

Transcription

1 The Oil & Gas Conference August 14, 2017 Scot Woodall President & CEO

2 Forward-Looking & Other Cautionary Statements DISCLOSURE STATEMENTS FORWARD-LOOKING STATEMENTS: This presentation (which includes oral statements made in connection with this presentation) contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All written or oral statements, other than historical financial information, may be deemed to be forward-looking statements. Words such as expects, forecast, guidance, anticipates, intends, plans, believes, seeks, estimates and similar expressions or variations of such words are intended to identify forward-looking statements; however, these are not the exclusive means of identifying forward-looking statements. In particular, the Company is providing 2017 and 2018 operating guidance, which contains projections for certain 2017 and 2018 operational and financial metrics. Additional forward-looking statements in this presentation relate to, among other things, future capital expenditures, projects and opportunities. These and other forward-looking statements in this presentation are based on management s judgment as of the date of this presentation and are subject to numerous risks and uncertainties. Actual results may vary significantly from those indicated in the forward-looking statements due to, among other things, oil, NGL and natural gas price volatility, including regional price differentials; changes in operational and capital plans; costs, availability and timing of build-out of third party facilities for gathering, processing, refining and transportation; delays or other impediments to drilling and completing wells arising from political or judicial developments at the local, state or federal level, including voter initiatives related to hydraulic fracturing; development drilling and testing results; the potential for production decline rates to be greater than expected; regulatory delays, including seasonal or other wildlife restrictions on federal lands; exploration risks such as drilling unsuccessful wells; higher than expected costs and expenses, including the availability and cost of services and material; and our potential inability to achieve expected cost savings; unexpected future capital expenditures; economic and competitive conditions; debt and equity market conditions, including the availability and costs of financing to fund the Company s operations; the ability to obtain industry partners to jointly explore certain prospects, and the willingness and ability of those partners to meet capital obligations when requested; declines in the values of our oil and gas properties resulting in impairments; changes in estimates of proved reserves; compliance with environmental and other regulations; derivative and hedging activities; risks associated with operating in one major geographic area; the success of the Company s risk management activities; title to properties; litigation; environmental liabilities and other factors discussed in the Company s reports filed with the Securities and Exchange Commission ( SEC ). Please refer to the Company s Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC, specifically Item 1A, Risk Factors, and other filings including our Current Reports on Form 8-K and Quarterly Reports on Form 10-Q, for further discussion of risk factors that may affect the forwardlooking statements. Those disclosures are incorporated by reference herein. The Company assumes no obligation to publicly revise or update any forwardlooking statements based on future events or circumstances or otherwise, except as required by applicable law. All forward-looking statements are qualified in their entirety by this cautionary statement. This presentation is neither an offer to sell nor a solicitation of an offer to buy any securities, nor shall there be any sale of any such securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction. NYSE: BBG 2

3 Company Overview

4 Bill Barrett Corporation Overview Large, contiguous acreage position within two core basins DJ Basin located in rural setting that is favorable for oil development Improving cost structure has translated into peer leading operating margins DJ Basin ~71,900 net acres 1 2Q17 Production: 14,456 Boe/d Highly efficient drilling and completion operations Enhancing results by incorporating improved wellbore construction and completion techniques Uinta Basin ~24,000 net acres 2Q17 Production: 2,296 Boe/d Financially well-positioned with liquidity to internally fund drilling program, while retaining flexibility 1 Pro forma for acreage acquisition completed during 2017 NYSE: BBG 4

5 DJ Basin Economics Rank High Among Oil Plays Average Oil Price Required to Generate a 25% IRR Source: Wall Street Sell-Side Research NYSE: BBG 5

6 Key Messages Demonstrated execution of focused operational and financial strategy Translates into solid results and basin leading margins NE Wattenberg located in rural setting that is favorable for oil development ~38% rate of return at wellhead assuming base assumptions Have the capital resources to facilitate growth strategy Cash position of ~$156 million at June 30, 2017 plus $300 million undrawn credit facility Delivered continued improvement across corporate structure in 2Q17 LOE of $3.61 per Boe, represents 32% y/y improvement DJ Basin LOE of $3.06 per Boe, represents 18% y/y improvement DJ Basin oil price differential narrowed to $2.16 per barrel, represents 55% y/y improvement Capital program designed to maintain operational and financial flexibility 2017 activity expected to deliver 2018 production growth in excess of 30% 2017 program is pre-funded with an ability to adjust capital program if necessary to respond to changes in commodity price; trending towards lower end of guidance range with same planned activity level No long-term drilling, completion or oil marketing commitments Acreage position is largely held by production NYSE: BBG 6

7 Operational Overview

8 DJ Basin Provides Strategic Advantage Large, contiguous acreage position provides substantial development opportunity NE Wattenberg ~71,900 total net acres favorable for XRL development 1 Targeted development of stacked-pay horizons within Niobrara formation Drilling depth of ~6,000 with ~9,500 lateral Rural acreage position has very few occupied structures located near development operations NE Wattenberg provides focused extended reach lateral ( XRL ) horizontal development ~64,400 net acres in NE Wattenberg 1 ~80% of acreage can be developed with XRL wells in 1,280-acre drilling spacing unit Increased footprint through bolt-on transactions Added 16,700 net acres at attractive average cost Contains ~130 operated XRL drilling locations and increased ownership in ~20 additional XRL locations; initial drilling planned for 1H18 Located in comparable geologic setting to existing acreage and prospective for the Niobrara B, C & Codell 1 Includes acreage acquisitions completed in 2017 NYSE: BBG 8

9 Favorable Development Setting Operate in rural area of DJ Basin Favorable regulatory environment Controllable and efficient development NYSE: BBG 9

10 Niobrara Pay Section NE Wattenberg Cross Section Detailed core analysis confirms reservoir and resource quality is consistent Over 920 of core was analyzed from four distinct well locations throughout acreage position Strong average oil saturations (So) across acreage = 45%-57% Nine mineral petrophysical model calibrated from core data for more accurate reservoir and resource assessment Calculated oil saturated pore volume (SoPhiH), an indicator of resource in place, is consistent with range = Net footage of resistivity greater than 20 Ohms, an indicator of overall hydrocarbon charge, is also fairly consistent, with a range of GR Resistivity Highlight > 20 ohms A A Clay Bound Water / Free Water / Hydrocarbon Volume GR Resistivity Highlight > 20 ohms Clay Bound Water / Free Water / Hydrocarbon Volume GR Avg So = 48% SoPhiH = 5.5 Net feet > 20 Ohmms = 59 Avg So = 45% SoPhiH = 8 Net feet > 20 Ohmms = 79 A Resistivity Highlight > 20 ohms A Avg So = 57% SoPhiH = 7.5 Net feet > 20 Ohmms = 73 Clay Bound Water / Free Water / Hydrocarbon Volume A Bench B Bench C Bench NYSE: BBG 10

11 NE Wattenberg Focus Area Early adopters recognizing economic benefit of XRL development Targeted development of Niobrara horizons throughout acreage position Section (9 XRL wells) Enhanced proppant (1,500 lbs/lateral foot) Initial flowback began in 1Q17 Section (4 XRL & 10 MRL wells) Enhanced proppant (1,500 lbs/lateral foot) Reduced frac stage spacing from ~175 (55- stages) to ~100 (95-stages) Initial flowback began in 2Q17 Section (5 XRL wells) Enhanced proppant (1,500 lbs/lateral foot) Frac stage spacing of ~120 (82-stages) Currently completing Section (6 XRL wells) Enhanced proppant (1,500 lbs/lateral foot) Frac stage spacing of ~120 (82-stages) Currently completing XRL Program generates competitive economics in current pricing environment BBG horizontal wells XRL well activity NE Wattenberg Focus Area XRL wells 10 MRL wells Flowback XRL wells Completing XRL wells Flowback XRL wells Completing XRL wells Drilling XRL wells Drilling NYSE: BBG 11

12 Feet/Day Enhancing XRL Cost Efficiencies Drilling rig expected to spud ~50 XRL wells per year XRL Well Average Drilling Days XRL Well Average Ft./Day Drilled ,000 3,500 3,424' Days 3,000 2,668' 2,500 2,080' Days 2,000 1,500 1,343' Days "Best in class" well drilled in 5.1 days spud to RR 1, Spud to TD TD to RR Rig Skid/Move NYSE: BBG 12

13 Barrels (Oil) BOE (2-stream) Enhancing Completion Design 300, , , , ,000 50,000 0 Increased Proppant (1,000# vs 1,250#) +36% Month Standard Completion Enhanced Completion 2017 Completion Objectives Increase proppant to 1,500 lbs per lateral foot from 1,000 lbs per lateral foot Reduction in frac stage spacing from ~175 feet to ~ feet between stages Adjust fluid design to allow more sand to be placed in wellbore 100,000 90,000 Tighter Frac Stage Spacing (175 vs 120 ) +12% 80,000 70,000 60,000 50,000 40,000 30,000 20,000 10, Stage Completion 82-Stage Completion NYSE: BBG 13

14 Progression of XRL Completions Controlled Flowback Plug and Perf Increased Proppant Increased Frac Stages Completion design enhancements leads to improved results NYSE: BBG 14

15 DJ Basin XRL Indicative Economics 700 Mboe EUR 600 Mboe EUR 500 Mboe EUR Pre-Tax EUR PV10 Payout (Mboe) IRR ($ millions) (Years) % $ % $ % $ Calculated for an XRL well with a ~9,500 lateral, 55-stage plug-and-perf, $4.75 mm well cost, $4.00/bbl WTI differential for 1 st two years & $7.00/bbl thereafter NYSE: BBG 15

16 DJ Basin Oil Infrastructure Addition of Saddlehorn/Grand Mesa oil pipeline in 2016 significantly increased takeaway capacity to ~650 Mbbls/d DJ Basin oil production currently at ~300 Mbbls/d Pipeline infrastructure provides multiple outlets to Cushing marketplace Local refineries and rail provide additional outlets Bbls/d Third-party oil marketers continue to discount pipeline tariffs in an effort to fill contractual capacity Source: COGCC and company estimates NYSE: BBG 16

17 Provides Competitive Advantage BBG benefits from having no firm marketing commitments and favorable API gravity crude Oil price differential expected to average $3-$4 per barrel below WTI 2Q17 BBG differential averaged $2.16 per barrel DJ Basin Oil Price Differential $12 $10 DJ Basin Oil Differential - Deduct to WTI $8 $6 $4 $2 3Q16 benefitted from start up of Saddlehorn/Grand Mesa Pipeline Est. Forward Range $3-$4 per barrel, based on current market fundamentals $0 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 NYSE: BBG 17

18 Best in Class DJ Basin Operating Margins Generating 34% greater unhedged operating margins compared to DJ Basin peers $30 $27.17/boe $25 Peer Average - $20.30/boe $20 $15 $10 $5 $0 BBG Peer 1 Peer 2 Peer 3 Peer 4 Source: Company filings and calculated for second quarter 2017 results Peers include BCEI, PDCE, SRCI, XOG NYSE: BBG 18

19 Uinta Oil Program Well development targeting Lower Green River formation High oil cut (~90%) provides strong margins and steady cash flow Changing market dynamics allowed for renegotiation of marketing contract leading to significant improvement in differentials East Bluebell ~24,000 net acres Differential expected to average ~$2 per barrel going forward, down from a 2016 average of $7.75 per barrel Nine well recompletion program finished during the second quarter of 2017 with strong results Industry activity increasing across the basin 2Q17 production of ~2,300 Boe/d NYSE: BBG 19

20 Financial Overview

21 Track Record of Debt Reduction $1,200 Net Debt ($mm) Significant debt reduction accomplished in challenging commodity price environment April 2017 debt offering reduced gross debt by 6% Undrawn credit facility with borrowing base of $300 million No anticipated need to draw on revolver in 2017 Nearest note maturity is not until 2022 $1,000 $800 $600 $400 $200 $0 $450 $375 $300 $225 YE2012 YE2014 YE2016 Borrowing Base - $300 million with zero drawn Debt Maturity Profile $400 $150 $275 $75 $ Undrawn Credit Facility 7% Senior Notes New Senior Notes NYSE: BBG 21

22 Volume (bbl/d) Hedging Program Protects Cash Flow Actively manage hedge portfolio to support capital program, protect future cash flow and reduce commodity price risk Strategy is to hedge 50-70% of production on a forward 12-month to 18-month basis ,625 Bbls/d of crude oil hedged for the remainder of the year at an average WTI price of $58.19/Bbl ,868 Bbls/d of crude oil hedged at an average WTI price of $52.74/Bbl 1 9,000 6,000 $58.77 Crude Oil $57.69 $53.20 $52.13 $ hedge program expanded to support increased drilling activity 3, Q17 4Q17 1H18 2H18 1 Hedge position as of August 11, 2017 $40 NYSE: BBG 22

23 2017 Guidance and Outlook Capital expenditure range of $255-$285 million Trending towards lower end of range with the same number of wells spud Guidance reflects additional drilling rig starting in the second quarter and acreage acquisitions Assumes $4.75 mm XRL well cost reflecting enhanced completions and anticipated service cost inflation Capital program funded through cash flow and cash on hand 3Q17 capital expenditures are expected to total $65-$75 million Total production of MMBoe Designed to deploy capital with attractive returns, while maintaining flexibility Represents 7% production growth at the mid-point compared to pro forma 2016 production 3Q17 production expected to approximate MMBoe 2017 activity expected to deliver 2018 production growth in excess of 30% Lease operating expense of $27-$30 million General and administrative expense of $30-$33 million 1 Gathering, transportation and processing costs of $2-$3 million Unused commitment for firm natural gas transportation of $18-$19 million 1 Excludes non-cash, performance-based compensation and one-time costs NYSE: BBG 23

24 Summary Core DJ Basin acreage position is in rural location and within a top-tier basin Solid financial position with cash and undrawn credit facility that is supported by underlying hedge position Executing on the items within our control to generate operational efficiencies that reduce cost structure Best in Class DJ Basin Operating Margins Among Peers Financial capacity to fund growth activity NYSE: BBG 24

25 1099 Eighteenth Street, Suite 2300 Denver, CO Website: Investor Relations Contact: Larry C. Busnardo (303)