By OGJ editors
HOUSTON, Jan. 31 -- Berry Petroleum Co., Bakersfield, Calif., and Bill Barrett Corp., Denver, plan to explore and develop shallow gas in Cretaceous Niobrara in the Denver-Julesburg basin.
Berry will acquire a 50% working interest in 345,000 prospective acres in Colorado, Kansas, and Nebraska from Barrett for $5 million, with closing set for early February.
Berry last week completed the acquisition from private J-W Operating Co., Dallas, of a 52% working interest in 130,000 acres and more than 650 producing gas wells in 20 fields in Yuma County, Colo., in the heart of the Niobrara play, for $105 million. The deal also included 100% ownership in certain gas compression and transportation assets.
The assets acquired from J-W Operating are producing 8.8 MMcfd of gas, and Berry estimated proved reserves at 87 bcf.
Berry identified more than 150 drilling locations on 80 acres and 500 more locations on 40-acre spacing in the low geologic risk play. Pipeline takeaway capacity from the region has recently grown, and the gas brings 85¢/Mcf less than the Henry Hub index, the company said.
The Berry-Barrett acreage is immediately east of the lands acquired from J-W Operating.
Berry and Barrett plan to evaluate the combined acreage, with Barrett conducting seismic programs and drilling the first wells. Berry will operate the wells once production is established.
Drilling of the obligatory first two test wells is to start in the first quarter of 2005. Berry pegs 2005 Niobrara spending at $2-5 million to drill 60 wells and rework 25 wells. The company will strive to cut operating costs from $1.50/Mcf.