Bill Barrett, Fifth Creek form HighPoint Resources

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Shale energy company Bill Barrett Corp. completed its merger with Fifth Creek Energy and started trading last Tuesday under the new symbol, HPR, for HighPoint Resources.

Bill Barrett ended the year with proved reserves up 56 percent from year-end 2016. It reported a net loss of $77.8 million for the fourth quarter.  Bill Barrett previously entered into an agreement for the all-stock merger with NGP-backed Fifth Creek in December. The transaction, valued at $649 million by the companies, includes Fifth Creek’s assumption of $54 million in debt.

Bill Barrett in November sold off its acreage in the Uinta shale in Colorado to an undisclosed buyer for about $110 million. The company said the acreage in question produced on average 2,300 barrels of oil equivalent per day in the third quarter, with about 90 percent of that coming as oil. The total reserve estimate for the company’s acreage was 12 million barrels of oil equivalent.

“We have undergone a significant transformation over the past several years and are positioned to embark on an exciting new era for the organization as a premier, DJ Basin focused company,” Highpoint President and CEO Scot Woodall said in a statement.

Woodall at the time said the sale put his company squarely in the Denver-Julesburg basin in Colorado, streamlining operations behind just one shale area in the state. Highpoint now has a large, contiguous acreage position in the Northeast Wattenberg and Hereford Fields of the DJ Basin which are located predominantly in rural areas of the eastern plains of Colorado and parts of southeastern Wyoming with an associated favorable regulatory environment. The company expanded its core acreage position in December 2017 with the addition of ~ 81,000 net acres in the Hereford Field.

Colorado is rich in shale oil reserves, supplying about 3 percent of total U.S. crude oil production in large part from its Niobrara and DJ Basins. As a whole, Colorado produces around 374,000 barrels of oil per day.

Related:  Bill Barrett builds his 4th exploration company (2005)

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Operating Guidance from Highpoint

HighPoint announced its 2018 financial and operating guidance, provided an initial outlook for 2019 and provided an operations update, including these highlights:

2018 capital expenditures of $500 million to $550 million that will be primarily internally funded with cash on hand and cash flow from operations

2018 pro forma production sales volumes of 11.0-11.5 million barrels of oil equivalent (“MMBoe”), representing year-over-year growth of approximately 80% from the DJ Basin and year-over-year growth of greater than 40% from Northeast Wattenberg (“NE”)

2019 production sales volumes of 18-20 MMBoe (~65% oil) with associated capital expenditures of $575 million to $625 million, representing year-over-year production growth of approximately 70% at the mid-point

Operating cash flow to exceed capital expenditures in the second half of 2019 with a year-end leverage ratio below 1.5 times

NE Wattenberg optimized completion program for 2017 had twelve-month cumulative oil production 47% higher than the 2015 program

Three new wells brought online in the Hereford Field (“Hereford”) in December 2017 had an average initial thirty-day production rate of 1,016 Boe/d (86% oil)

The production profile will be weighted more to the second half of 2018 since there was no new drilling or completion activity in Hereford during the first quarter of 2018. Starting in April, completion operations will commence on eight previously drilled, but not completed, extended reach lateral (“XRL”) wells in Hereford with initial flowback anticipated in late second quarter. Drilling is also expected to begin in April with initial production from new wells forecast to impact the fourth quarter of 2018.