This excerpt taken from the BBG 8-K filed Nov 5, 2008.
and Third Quarter 2008 Results
DENVER November 5, 2008 Bill Barrett Corporation (NYSE: BBG) today reported third quarter 2008 operating results highlighted by:
Chairman and Chief Executive Officer, Fred Barrett, commented:
Our Company is very excited about the initial results from the first two horizontal Gothic shale gas wells at the Yellow Jacket prospect in southwest Colorado. The Koskie well produced for 17 days, averaging 4.5 million cubic feet per day (MMcf/d) of natural gas over the final ten days and completed the testing period at a rate of 5.7 MMcf/d. The second horizontal well, the Neely well located 14 miles north of the Koskie discovery, is currently testing early in the flowback stage at 3.1 MMcf/d natural gas. Due to the encouraging results from the wells drilled to date, in 2009 we will operate a continuous program to evaluate the area and will begin construction of infrastructure. This is a widespread but shallow (5,500 to 6,500 feet) resource play where the Company has built a 397,000 gross acre position over the past four years.
Execution of our development programs continues to deliver growth. During the third quarter, we achieved a record level of production, maintained cash flows consistent with the second quarter 2008 despite a 30% decrease in the average regional natural gas price, and ended the quarter posting the highest quarterly earnings ever in our corporate history.
2008 is proving to be a very successful year and will position us well for 2009. As the broader market environment presents challenges going into 2009, we will continue to focus on our operating strengths while managing to a disciplined capital program. We will enter 2009 with a strong balance sheet, ample liquidity and a substantial hedging program, all to ensure financial stability and cash flows that support our exploration and development plans.
Production for the quarter ended September 30, 2008 was 19.6 Bcfe, representing a 33% increase from the third quarter of 2007 and a 2% increase sequentially. For the first nine months of 2008, production totaled 57.0 Bcfe, representing a 30% increase compared with 44.0 Bcfe in the first nine months of 2007. Rocky Mountain regional natural gas prices and oil prices peaked early in the third quarter, then declined significantly. Regional natural gas prices tend to be lowest in the months of September and October due to lower demand as a result of mild seasonal weather. Including the effects of all of the Companys hedging activities, the average sales price realized in the third quarter of 2008 was $7.86 per Mcfe compared with $5.58 per Mcfe in the third quarter of 2007.
Discretionary cash flow (a non-GAAP measure, see page 13 for explanation and reconciliation) was $105.6 million in the third quarter of 2008, or $2.34 per diluted common share, up 93% compared with the third quarter of 2007. The year-over-year increase was primarily the result of the 33% increase in production and a 41% increase in the average realized price, partially offset by higher per unit gathering and transportation expenses and production taxes. For the first nine months of 2008, discretionary cash flow was $327.3 million, or $7.24 per diluted common share, up 83% compared with $178.4 million, or $4.01 per diluted common share, in the prior year period, also due primarily to increased production and higher commodity prices as well as lower per unit lease operating expenses.
Net income was $36.1 million, or $0.80 per diluted common share, for the third quarter of 2008 compared with $0.2 million, or $0.01 per diluted common share, in the third quarter of 2007. The increase in net income was primarily a result of higher production and a higher per unit profit margin, including reduced per unit depreciation, depletion and amortization expenses. For the first nine months of 2008, net income was $100.8 million, or $2.23 per diluted common share, up from $24.3 million, or $0.55 per diluted common share, in the prior year period, also as a result of higher production and a higher per unit profit margin.