Bill Barrett to divest Powder River, Piceance properties

Sept. 16, 2014
Bill Barrett Corp., Denver, reported that it has agreed with several undisclosed buyers to sell the majority of its Powder River basin acreage and remaining position in the Gibson Gulch natural gas program in Colorado’s Piceance basin in deals totaling $757 million.

Bill Barrett Corp., Denver, reported that it has agreed with several undisclosed buyers to sell the majority of its Powder River basin acreage and remaining position in the Gibson Gulch natural gas program in Colorado’s Piceance basin in deals totaling $757 million.

The transactions include an acreage trade in which Bill Barrett will acquire 7,856 net acres and 390 boe/d net production within the southern block of its operated Northeast Wattenberg area in exchange for Powder River acreage. The deal is effective Apr. 1.

“We are very pleased to expand our position in the Northeast Wattenberg, where we are getting excellent results,” said Scot Woodall, Bill Barrett chief executive officer and president.

“The acquisition in the Northeast Wattenberg increases our acreage position by approximately 20% through increased working interests. This positions us to have greater operating control and enables us to accelerate drilling and extract more value from this core area.”

The other sales include 46,510 net acres in the Powder River basin with net production that averaged 1,479 boe/d in the second quarter and proved reserves of 4.2 million boe at yearend 2013; and 12,000 net acres in the Piceance basin with net production that averaged 80 MMcfd of natural gas equivalent in the second quarter and proved reserves of 438 bcf natural gas equivalent at yearend 2013. The Piceance deal is effective July 1.

All deals are expected to close by the end of the third quarter. The company says it intends to sell its remaining Powder River position encompassing 17,649 net acres and 170 boe/d of production, based on the second quarter results.

Vanguard takes Piceance properties

In a separate release, Vanguard Natural Resources LLC, Houston, reported that it has agreed to acquire natural gas, oil, and NGL assets in the Piceance basin from Bill Barrett for $525 million. The deal is effective July 1 and is expected to close on or before Oct. 1.

The properties consist of 12,000 net acres currently producing 67 MMcfed, after consideration of ethane rejection, with 76% natural gas, 5% oil, and 19% NGLs.

The assets’ estimated reserve life is 16 years based on internally estimated proved reserves of 389 bcf of gas equivalent, of which 79% is proved developed and 77% is natural gas. The projected proved developed production 3-year average annual decline rate is 11%.

Vanguard will assume 78% working interest in 950 producing wells, 119 recompletion projects, and 94 proved undeveloped vertical drilling locations. The company notes that an established infrastructure is in place with multiple pipeline outlets.

“With this acquisition we are acquiring the balance of the working interest in properties where we first established a non-operated position in December of 2012,” explained Scott W. Smith, Vanguard president and chief executive officer.

“As the operator and majority interest owner in the assets, we can now govern the pace of development of both recompletion opportunities and development drilling projects to take advantage of positive changes in market conditions,” Smith added.

The two companies previously participated in a transaction in which Vanguard, in part, acquired Powder River coalbed methane assets and a working interest in a Gibson Gulch-Piceance development property from Bill Barrett for $335 million (OGJ Online, Nov. 1, 2012).

Last month, Vanguard agreed to acquire Cotton Valley and East Haynesville assets from Hunt Oil Co. for $278 million (OGJ Online, Aug. 4, 2014).