DENVER, Dec. 5, 2017 /PRNewswire/ -- Bill Barrett
Corporation (the "Company" or "Bill Barrett") (NYSE: BBG) announced
today that it has agreed to a strategic business combination with
Fifth Creek Energy Company, LLC ("Fifth Creek"), a portfolio
company of NGP, in a transaction valued at approximately
$649 million. The transaction creates
a premier exploitation and production company exclusively focused
on oil-weighted rural areas in the Denver-Julesburg ("DJ") Basin. The combined company
will possess significant size, scale, and balance sheet flexibility
allowing it to economically develop a combined acreage position of
approximately 151,100 net acres and an inventory of 2,865
highly-economic future drilling locations, nearly all of which are
suitable for extended reach lateral ("XRL") development. The
transaction is expected to close late in the first quarter or early
in the second quarter of 2018, and is subject to customary
conditions, including approval of the Company's
stockholders.
Acquisition Highlights
- Creates premier DJ Basin focused company with a highly
contiguous and complementary acreage position that is conducive to
XRL development
- Pro forma proved reserves of 168 million barrels of oil
equivalent (MMBoe) (69% oil) as of December
31, 2016 and pro forma third quarter of 2017 production of
approximately 24 MBoe/d (64% oil)
- Acquisition adds approximately 81,000 net acres and
approximately 2,900 Boe/d (72% oil) of production located in the
Hereford Field area of rural northern Weld County, Colorado
- Hereford Field drilling results are among the highest rate oil
wells drilled in the DJ Basin with seven wells averaging 1,052
Boe/d (84% oil) (two-stream basis) during their initial thirty days
of production
- Combined company will have substantial scale with approximately
151,100 net acres and a deep inventory of 2,865 undeveloped
drilling locations (~95% XRL) that are prospective for multiple
Niobrara horizons and the Codell formation, and provide strong
weighted average economic returns of 65% at strip pricing
- Maintain operational control as 100% of net acreage at the
Hereford Field is operated, largely held by production with minimal
near-term lease expirations, and established well control
consisting of 62 standard reach lateral ("SRL") delineation wells
and seven XRLs
- Established infrastructure on both assets with low operating
costs and current oil differentials to WTI of less than
$2.50 per barrel
- Initial 2018 plans are to operate three drilling rigs on the
combined acreage with anticipated 2018 production of 11-12 MMBoe
(~65% oil) and capital expenditures of $500-$600
million
- Solid pro forma financial position highlighted by improving
leverage metrics, no near-term debt maturities and ample liquidity
to fund development
Chief Executive Officer and President Scot Woodall commented, "We are extremely
pleased to announce a strategic combination with Fifth Creek. We
have been seeking opportunities to expand our core DJ Basin asset
base with the right acquisition to ensure the best value creation
opportunity for our stockholders. This presents us with a unique
opportunity to add a large, undeveloped acreage position at an
attractive cost with the potential for decades of high-return
drilling locations located in a rural area that is highly
complementary to our legacy position. The transaction creates a
compelling long-term growth platform that will allow us to deliver
strong company-wide margins as we maximize capital efficiency and
concentrate on the highest return project areas. We expect to
immediately begin employing our operational expertise on the
acquired acreage as we implement enhanced completion and flowback
techniques. The acquisition is credit enhancing as it significantly
strengthens our balance sheet, and increases our ability to deliver
higher future cash flow and EBITDAX generation. Fifth Creek has
built a premier acreage position and with the support of our new
partners, we look forward to developing this asset and building
value for all stockholders."
Michael R. Starzer, Chief
Executive Officer and Chairman of Fifth Creek, stated, "We are
excited by the opportunity to partner with Scot and his team to
create a premier company that is focused on oil-weighted rural
areas of the DJ Basin. We believe the combined company's world
class development inventory and exceptional operating talent will
result in an excellent outcome for stockholders. At Hereford, Fifth
Creek has been on the leading edge of applying modern completion
technology to its wells and is proud to have achieved basin-leading
results. We are pleased with the opportunity to partner with a
company that has successfully managed its business through the
downturn, consistently achieving its operating targets and
outperforming expectations. I am confident that Scot and his team
will do a terrific job of creating value for stockholders."
Scott A. Gieselman, NGP partner,
commented, "The combination of Bill Barrett Corporation and Fifth
Creek Energy creates a premier oil focused and rural DJ Basin
company with unparalleled growth potential at strong returns. We
are proud of our new partnership with the Bill Barrett team given
their excellent track record and look forward to participating in
the growth of the combined entity."
Transaction Details
Under the terms of the transaction, Bill Barrett and Fifth Creek
will each become subsidiaries of a newly formed holding company
("New BBG"), which will become the publicly listed and traded
holding company for the combined Bill Barrett and Fifth
Creek. In the transaction, Bill Barrett's stockholders will
exchange their Bill Barrett 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 the New BBG's common stock. Based on
the Company's closing stock price as of December 4, 2017, the consideration being
delivered to Fifth Creek's owner implies a total transaction value
of approximately $649 million on an
enterprise value basis, which includes the shares plus the
assumption of up to $54 million of
debt.
Concurrent with the transaction, the Company also announced that
it has agreed to a privately negotiated exchange with a holder of
the Company's 7.0% Senior Notes due 2022 (the "Notes"), in which
the holder has agreed to exchange $50
million aggregate principal amount of the Notes for newly
issued shares of the Company's common stock plus the cash payment
of accrued and unpaid interest. The number of shares exchanged will
be calculated based on the volume-weighted average price of trading
on December 6, 2017 and the value of
the bonds will be at 102% of par.
Holders of the Senior Notes that hold a majority of the
outstanding aggregate principal amount of each series of Senior
Notes have agreed to deliver consents pursuant to which the
proposed transaction with Fifth Creek will not be considered a
change of control for purposes of the Company's Senior
Notes.
The Board of Directors of both companies have unanimously
approved the terms of the agreement. The completion of the
transaction is subject to approval of the Bill Barrett
stockholders, any regulatory approvals and customary conditions.
The transaction is expected to close late in the first quarter or
early in the second quarter of 2018.
Pro Forma Position
The combined company will create a leading DJ Basin pure play
company with an exclusively rural acreage position and significant
weighting to oil and natural gas liquids. The combined company will
possess two core and highly contiguous acreage positions with
approximately 151,100 net acres located in the Hereford Field and
Northeast ("NE") Wattenberg areas and a deep inventory of
approximately 2,865 gross undeveloped locations (~95% XRL) that are
prospective for multiple Niobrara benches and the Codell formation
and confirmed with extensive seismic and petrophysical analysis and
modelling. Assuming current strip pricing, these locations are
expected to provide an attractive weighted average rate of return
of approximately 65%. Average daily production for the combined
assets was approximately 24 MBoe/d (81% liquids, 64% oil) in the
third quarter of 2017 with combined proved reserves of 168 MMBoe
(69% oil) as of December 31,
2016.
The combined company will greatly benefit from increased
economies of scale and a low operating cost structure. The largely
undeveloped nature of Fifth Creek's acreage position allows for the
application of modern completion designs to enhance well returns.
The Hereford Field has established well control as a result of 62
SRL delineation wells, including the historic "Jake well" that is
credited with starting the horizontal Niobrara drilling boom in the
DJ Basin. During 2017, seven wells were completed in the Hereford
Field with modern completion designs and had an average initial
thirty-day production rate of 1,052 Boe/d (84% oil), which are
among the highest rate oil wells ever drilled in the DJ Basin. It
is also anticipated that three drilling rigs will operate on the
combined acreage position in 2018. The combined acreage has
existing infrastructure in place to support planned development and
benefits from having no firm oil marketing or pipeline commitments,
resulting in current oil price differentials to West Texas
Intermediate pricing of less than $2.50 per barrel. Approximately 150 gross wells
will spud in 2018 with anticipated 2018 production of 11-12 MMBoe
(~65% oil) and $500-$600 million of associated capital expenditures.
This preliminary plan assumes full-year 2018 outlooks for each
company and formal 2018 guidance is anticipated to be issued
following the closing of the transaction.
The combined company will be well capitalized with a solid
financial position and balance sheet flexibility with no debt
maturities until 2022. Balance sheet strength is highlighted by a
significant cash position, an undrawn credit facility, improving
leverage metrics, and strong liquidity to fund the planned
high-return development program.
Leadership and Corporate Governance
Scot Woodall will continue to
serve as Chief Executive Officer and President of the combined
company. The Board of Directors of the combined company will be
comprised of eleven members, including the six members of Bill
Barrett's current Board of Directors and five members that will be
designated by Fifth Creek. Jim W.
Mogg will continue to serve as Chairman of the Board.
Advisors
Tudor, Pickering, Holt & Co. acted as financial advisor to
Bill Barrett and Wachtell, Lipton, Rosen & Katz acted as legal
advisor to Bill Barrett.
Credit Suisse acted as financial advisor to Fifth Creek and
Vinson & Elkins LLP acted as legal advisor to Fifth
Creek.
Conference Call and Presentation
The Company plans to host a conference call on Wednesday, December 6, 2017 at 8:30 a.m. Eastern time (6:30 a.m. Mountain time) to discuss the
transaction. A live webcast of the call will be available on the
"Investor Relations" section of the Company's website at
www.billbarrettcorp.com. To join by telephone, call (855) 760-8152
((631) 485-4979 for international callers) with passcode 8682828. A
replay of the conference call will be available shortly after the
conclusion of the call at (855) 859-2056 ((404) 537-3406
international) with passcode 8682828. A slide presentation that
will be referenced on the conference call will be available on the
"Investor Relations" section of the Company's website prior to the
start of the call.
Forward-Looking Statements
All statements in this press release, other than statements of
historical fact, are forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. 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
herein; however, these are not the exclusive means of identifying
forward-looking statements. Forward-looking statements in this
release relate to, among other things, the closing and anticipated
effects of the transaction with Fifth Creek, future production,
capital expenditures and projects, synergies, drilling locations,
well results, balance sheet attributes, liquidity, and other
anticipated plans and aspects of the combined
company.
These and other forward-looking statements in this press release
are based on management's judgment as of the date of this release
and are subject to numerous risks and uncertainties. Actual results
may vary significantly from those indicated in the forward-looking
statements. Please refer to the Company's Annual Report on Form
10-K for the year ended December 31, 2016 filed with the SEC,
and other filings, including our Current Reports on Form 8-K and
Quarterly Reports on Form 10-Q, all of which are incorporated by
reference herein, for further discussion of risk factors that may
affect the forward-looking statements. The transaction may not be
completed in the timeframe expected or at all, and if completed may
not provide the benefits the Company anticipates. The Company
encourages you to consider the risks and uncertainties associated
with projections and other forward-looking statements and to not
place undue reliance on any such statements. In addition, the
Company assumes no obligation to publicly revise or update any
forward-looking statements based on future events or
circumstances.
ABOUT BILL BARRETT CORPORATION
Bill Barrett Corporation (NYSE: BBG), headquartered in
Denver, Colorado, develops oil and
natural gas in the Rocky Mountain region of the United States. Additional information
about the Company may be found on its website
www.billbarrettcorp.com.
ABOUT FIFTH CREEK ENERGY
Fifth Creek Energy Company, LLC is an independent oil and
natural gas company based in Denver,
Colorado and engaged in the acquisition, development and
production of onshore oil and associated liquids-rich natural gas
in North America.
ABOUT NGP
Founded in 1988, NGP is a premier private equity firm in the
natural resources industry with approximately $17 billion of cumulative equity commitments
organized to make strategic investments in the energy and natural
resources sectors. For more information visit
www.ngpenergycapital.com
IMPORTANT ADDITIONAL INFORMATION
This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities or a solicitation of
any vote or approval. In connection with the proposed transaction,
the Company and Fifth Creek will cause New BBG to file with the SEC
a registration statement on Form S-4, which will include a
prospectus with respect to the shares of New BBG to be issued in
the proposed transaction and a proxy statement of the Company with
respect to the obtaining of stockholder approval for the
transaction. The Company and New BBG also plan to file other
documents with the SEC regarding the proposed merger. After the
registration statement has been declared effective by the SEC, a
definitive proxy statement/prospectus will be mailed to the
stockholders of the Company. STOCKHOLDERS OF THE COMPANY ARE URGED
TO READ THE REGISTRATION STATEMENT AND PROXY STATEMENT/PROSPECTUS
(INCLUDING ALL AMENDMENTS AND SUPPLEMENTS THERETO) AND OTHER
DOCUMENTS RELATING TO THE PROPOSED MERGER THAT WILL BE FILED WITH
THE SEC CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
MERGER. Investors will be able to obtain free copies of the proxy
statement/prospectus and other documents containing important
information about New BBG, the Company and Fifth Creek, once such
documents are filed with the SEC, through the website maintained by
the SEC at http://www.sec.gov. Copies of the documents filed with
the SEC by the Company will be available free of charge on the
Company's internet website at www.billbarrettcorp.com under the tab
"Investors" and then under the tab "SEC Filings" or by contacting
the Company's Investor Relations Department at (303) 293-9100.
PARTICIPANTS IN THE SOLICITATION
New BBG, The Company, and their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies in connection with the proposed
transaction. Information about the directors and executive officers
of the Company is set forth in the Company's public filings with
the SEC, including its definitive proxy statement filed with the
SEC on April 6, 2017. Other
information regarding the participants in the proxy solicitation
and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the proxy
statement/prospectus and other relevant materials filed with the
SEC. Free copies of these documents can be obtained as described in
the preceding paragraph.
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SOURCE Bill Barrett Corporation