Bill Barrett Corp. selling partial interest in Silt-area gas holdings
Bill Barrett Corp. said today it plans to sell what eventually will amount to about a quarter interest in its natural gas holdings south of Silt.
The sale is part of a $335 million deal with Vanguard Natural Resources, LLC, that also includes natural gas assets in the Powder River and Wind River basins in Wyoming.
The deal, expected to close by the end of the year, reflects Bill Barrett Corp.’s recent shifting focus toward seeking to produce oil rather than natural gas at a time when oil prices are high and gas prices low. The company suspended its drilling in Garfield County this year and has been concentrating on oil opportunities in Utah and eastern Colorado.
Still, Bill Barrett Corp. is indicating it considers what it calls its Gibson Gulch asset in Garfield County to be highly valuable. Company chairman, chief executive officer and president Fred Barrett said the Vanguard transaction “pegs the pre-sale market value of our Gibson Gulch asset at approximately $1 billion, which I believe has not been recognized in the (stock) market.”
Under the deal, Vanguard will acquire an initial 18 percent Gibson Gulch working interest that will grow to 26 percent by 2016. Bill Barrett Corp. will continue to retain control over operations of the Gibson Gulch holdings.
As of Sept. 30, the company owned about a 98 percent working in interest in production from 935 wells in Gibson Gulch, it says. That production is currently 149 million cubic feet equivalent per day. That’s a figure that includes not just natural gas but natural gas liquids such as butane and propane, and some oil.
Fred Barrett said proceeds from the sale will be used to reduce debt in the short term “and to fund our low-risk reinvestment opportunities.”
Houston-based Vanguard is traded on the New York Stock Exchange, as is Bill Barrett Corp. Vanguard’s website says it is “focused on the acquisition and development of mature, long-lived oil and natural gas properties.” It has holdings in several states.
The company’s president and CEO, Scott W. Smith, said in a news release that the assets it is acquiring provide desirable characteristics including “a mature, developed production base” and predictable operating costs.