Bill Barrett Corp has agreed to a strategic business combination with Fifth Creek Energy Company, a portfolio company of NGP, in a transaction valued at approx. $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 approx. 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.Â  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.' Original article link Source: Bill Barrett Corp 
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