Bill Barrett Corp., Denver, and Fifth Creek Energy Co. LLC, Denver, have agreed to merge in a deal valued at $649 million creating an oil- and natural gas liquids-weighted firm with a combined 151,100 net acres focused on rural areas in the Denver-Julesburg basin. The deal includes shares plus the assumption of as much as $54 million of debt.
Bill Barrett and Fifth Creek will become subsidiaries of a newly formed holding company, New BBG, with plans to accelerate drilling on the combined acreage. The deal is expected to close in late first-half 2018.
Bill Barrett stockholders will exchange their common stock for New BBG common stock on a 1-for-1 basis, and Fifth Creek's current sole owner will receive 100 million shares of New BBG's common stock.
Fifth Creek will contribute its 81,000 net acres and 1,179 gross undeveloped locations in Hereford field to Bill Barrett's 57,000 net acres and 353 gross undeveloped locations in Chalk Bluffs and 64,400 net acres and 1,333 gross undeveloped locations in Northeast Wattenberg.
Fifth Creek's gross drilling locations are prospective for multiple Niobrara benches and the Codell formation are conducive to extended-reach lateral development and offer decades of operated drilling inventory, Bill Barrett said.
Initial plans for 2018 are to operate three drilling rigs with 150 gross wells spud on the combined acreage with anticipated 2018 production of 11-12 MMboe, about 65% oil, and capital expenditures of $500-600 million allocated to the highest return inventory, Bill Barrett said.
The combined acreage contains pro forma proved reserves of 168 MMboe, about 69% oil, as of Dec. 31, 2016, and pro forma third-quarter 2017 production of 24,000 boe/d, 81% liquids and 64% oil, which includes 2,000 boe/d of production associated with Uinta basin assets expected to be sold before yearend.
Existing infrastructure supports development. According to Colorado Oil & Gas Conservation Commission and Bill Barrett, in 2016, the Saddlehorn-Grand Mesa oil pipeline increased takeaway capacity to 650,000 b/d (OGJ Online, Nov. 19, 2015). Local refineries and rail provide additional outlets.
Scot Woodall will continue to serve as chief executive officer and president of the combined company. The board will be comprised of 11 members, including the 6 members of Bill Barrett's current board and 5 that will be designated by Fifth Creek. Jim W. Mogg will continue to serve as chairman.
Fifth Creek is a portfolio company of NGP, a private equity firm.