UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): September 28, 2015 (September 23, 2015)

 

 

Bill Barrett Corporation

(Exact name of registrant as specified in its charter)

 

 

 

Delaware   001-32367   80-0000545
(State or other jurisdiction
of incorporation) 		  (Commission
File No.) 		  (IRS Employer
Identification No.)

 

1099 18 th Street, Suite 2300

Denver, Colorado

  80202

(Address of principal

executive office)

  (Zip Code)

(303) 293-9100

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

  ¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

  ¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

  ¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

  ¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

Item 1.01 Entry into a Material Definitive Agreement

Fourth Amendment to Third Amended and Restated Credit Agreement . On September 23, 2015, Bill Barrett Corporation (the “Company”) entered into a Fourth Amendment to the Third Amended and Restated Credit Agreement dated March 16, 2010, among the Company, as the borrower, certain subsidiaries of the Company party thereto, each of the lenders and agents party thereto and JPMorgan Chase Bank, N.A., as administrative agent for the lenders (the “Fourth Amendment”). The Fourth Amendment has an effective date of September 23, 2015.

The Fourth Amendment, among other things:

 

  (i) replaces the total debt-to-EBITDAX ratio covenant in the credit agreement, for a period beginning on September 30, 2015 through and including March 31, 2018 (the “Specified Period”), with a secured debt-to-EBITDAX ratio pursuant to which the Company will not permit such ratio to exceed 2.5 to 1.0 during the Specified Period;

 

  (ii) adds a covenant pursuant to which the Company will not permit the ratio of EBITDAX to interest expense to be less than 2.5 to 1.0 during the Specified Period; and

 

  (iii) reaffirmed the current borrowing base at $375 million.

As of September 23, 2015, the Company had no amounts outstanding under the credit agreement, and the Company is currently in compliance with all financial covenants under the credit agreement.

Certain of the lenders under the credit agreement or their affiliates have provided and may continue to provide banking, financial, or other services to the Company and its affiliates. They have received, and may in the future receive, customary fees and commissions for their services.

The foregoing summary is qualified in its entirety by reference to the Fourth Amendment, which is attached hereto as Exhibit 10.1.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

The information set forth under Item 1.01 above hereby is incorporated by reference into this Item 2.03.

Item 7.01. Regulation FD Disclosure

On September 28, 2015, Bill Barrett Corporation issued a press release announcing, among other things: the Company’s borrowing base has been reaffirmed at $375 million with zero currently drawn; the sale of certain non-core Uinta Basin properties for $27 million cash; DJ Basin rig count being reduced from two rigs to one rig as a result of improvements in drilling and completion operations; 2015 capital expenditures reduced to $315-$325 million as a result of lower XRL well costs and increased drilling and completion efficiencies; and 2015 production guidance range increased to 6.3-6.5 MMBoe from 6.1-6.5 MMBoe.

The press release also announced plans to participate in the following investor events:

 

  •   September 29, 2015 – Chief Financial Officer and Treasurer, Robert W. Howard, will participate in investor meetings at the Deutsche Bank Energy 1x1 Corporate Days Conference. This event will not be webcast.

 

  •   September 30, 2015 – Mr. Howard will present at the Deutsche Bank Leveraged Finance Conference. This event will not be webcast.

An updated corporate presentation to be used at these events will be posted on the Company’s website at www.billbarrettcorp.com prior to market open on Tuesday, September 29, 2015.

The press release is attached as Exhibit 99.1 to this Current Report.

In accordance with General Instruction B.2 of Form 8-K, the information in this Item shall not be deemed “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing.

Item 9.01. Financial Statements and Exhibits

(d) Exhibits

 

Exhibit
Number 		   Description of Exhibit
10.1    Fourth Amendment dated effective as of September 23, 2015 to Third Amended and Restated Credit Agreement dated as of March 16, 2010, among Bill Barrett Corporation, certain of its subsidiaries party thereto and the banks named therein.
99.1    Press Release, dated September 28, 2015.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: September 28, 2015     BILL BARRETT CORPORATION
    By:  

/s/ Kenneth A. Wonstolen

      Kenneth A. Wonstolen
      Senior Vice President—General Counsel; and Secretary

EXHIBIT INDEX

 

Exhibit
Number 		   Description of Exhibit
10.1    Fourth Amendment dated effective as of September 23, 2015 to Third Amended and Restated Credit Agreement dated as of March 16, 2010, among Bill Barrett Corporation, certain of its subsidiaries party thereto and the banks named therein.
99.1    Press Release, dated September 28, 2015.

Exhibit 10.1

Execution Version

FOURTH AMENDMENT

TO

THIRD AMENDED AND RESTATED CREDIT AGREEMENT

AMONG

BILL BARRETT CORPORATION,

AS B ORROWER ,

THE GUARANTORS PARTY HERETO,

JPMORGAN CHASE BANK, N.A.,

AS A DMINISTRATIVE A GENT ,

AND

THE LENDERS PARTY HERETO

FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT

THIS FOURTH AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT (this “ Fourth Amendment ”) executed effective as of September 23, 2015 is among BILL BARRETT CORPORATION, a corporation duly formed and existing under the laws of the State of Delaware (the “ Borrower ”), the Guarantors party hereto, the Lenders party hereto and JPMORGAN CHASE BANK, N.A., as administrative agent for the Lenders (in such capacity, together with its successors in such capacity, the “ Administrative Agent ”).

R E C I T A L S

A. The Borrower, the Administrative Agent and the Lenders are parties to that certain Third Amended and Restated Credit Agreement dated as of March 16, 2010 (as amended to date and as the same may be further amended, modified or otherwise supplemented from time to time, the “ Credit Agreement ”), pursuant to which the Lenders have made certain credit available to and on behalf of the Borrower.

B. The Borrower has requested and the Administrative Agent and the undersigned Lenders have agreed to amend certain provisions of the Credit Agreement, such amendments to be effective as of the Amendment Effective Date.

C. NOW, THEREFORE, to induce the Administrative Agent and the Lenders to enter into this Fourth Amendment and in consideration of the premises and the mutual covenants herein contained, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

Section 1. Defined Terms . Each capitalized term used herein but not otherwise defined herein has the meaning given such term in the Credit Agreement, as amended by this Fourth Amendment. Unless otherwise indicated, all section references in this Fourth Amendment refer to sections of the Credit Agreement.

Section 2. Amendments to Credit Agreement .

2.1 Amendment to Section 1.02 .

(a) Section 1.02 is hereby amended by adding the following defined terms in the appropriate alphabetical order:

“ Engineered Value ” means, with respect to any Oil and Gas Property of the Borrower and the Subsidiaries, the value the Administrative Agent attributed to such Oil and Gas Property in connection with the most recent redetermination of the Borrowing Base pursuant to Section 2.07.

“ Senior Secured Debt ” means, at any date, (a) all Debt of the Borrower and the Consolidated Subsidiaries on a consolidated basis other than Debt described in clause (c) of the definition of “Debt” minus (b) the portion of such Debt that is not secured by a Lien on any assets of the Borrower or the Consolidated Subsidiaries.

(b) Section 1.02 is hereby amended by deleting and replacing the following defined term in the appropriate alphabetical order:

“ Change in Control ” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof) other than the Permitted Holders, of Equity Interests representing more than 49% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests of the Borrower, (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Borrower by Persons who were neither (i) nominated by the board of directors of the Borrower nor (ii) appointed or approved by directors so nominated or approved or (c) the acquisition of direct or indirect Control of the Borrower by any Person or group other than the Permitted Holders.

2.2 Amendments to Section 2.08(f) . Section 2.08(f) is hereby amended by (a) renumbering the existing clause (iv) thereof as clause (v) and (b) adding the following as a new clause (iv) thereof:

“(iv) any dispute between or among the Borrower and any beneficiary of any Letter of Credit or any other party to which such Letter of Credit may be transferred or any claims whatsoever of the Borrower against any beneficiary of such Letter of Credit or any such transferee”

2.3 Amendments to Section 9.01 .

(a) Section 9.01(a) is hereby amended by deleting such Section in its entirety and replacing it with the following:

“(a) Ratio of Total Debt to EBITDAX. Except with respect to any date of determination during the period beginning on September 30, 2015 through and including March 31, 2018, the Borrower will not, as of any date of determination, permit its ratio of Total Debt as of such day to EBITDAX for the most recent four fiscal quarters for which financial statements are available to be greater than 4.0 to 1.0.”

(b) Section 9.01 is hereby amended by adding the following as a new subsection 9.01(c):

 

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“(c) Ratio of Senior Secured Debt to EBITDAX. With respect to any date of determination during the period beginning on September 30, 2015 through and including March 31, 2018, the Borrower will not, as of any date of determination, permit its ratio of Senior Secured Debt as of such day to EBITDAX for the most recent four fiscal quarters for which financial statements are available to be greater than 2.5 to 1.0.”

(c) Section 9.01 is hereby amended by adding the following as a new subsection 9.01(d):

“(d) Interest Coverage Ratio . With respect to any fiscal quarter ending during the period beginning on September 30, 2015 through and including March 31, 2018 the Borrower will not, as of any date of determination, permit its ratio of (i) EBITDAX for the four fiscal quarters ending on the last day of such fiscal quarter to (ii) Interest Expense for the four fiscal quarters ending on such date to be less than 2.5 to 1.0.”

2.4 Amendments to Section 9.04 .

(a) Section 9.04(a) is hereby amended by adding the following phrase in clause (iv)(b) of such Section immediately following the word “exceeds” and immediately preceding the phrase “20% of the Borrowing Base then in effect”:

“(A) except during any fiscal quarter ending during the period beginning on September 30, 2015 through and including March 31, 2018, 20% of the Borrowing Base then in effect and (B) during any fiscal quarter ending during the period beginning on September 30, 2015 through and including March 31, 2018, the greater of (x) $100,000,000 and (y)”

(b) Section 9.04(b) is hereby amended by deleting clause (i) of such Section and replacing it with the following:

“(i) call, make or offer to make any voluntary or optional Redemption of or otherwise voluntarily or optionally Redeem (whether in whole or in part) any Permitted Debt, except (A) to the extent constituting a Redemption, the conversion of Permitted Debt into common stock of the Borrower and, in connection therewith, the settlement in cash of any Permitted Debt required to avoid the issuance of fractional shares of common stock, (B) if after giving pro forma effect to such Redemption the sum of (1) the unused portion of the Commitments and (2) unencumbered cash and Investments under Section 9.05(c) through Section 9.05(f) exceeds (x) except during any fiscal quarter ending during the period beginning on September 30, 2015 through and including March 31, 2018, 20% of the Borrowing Base then in effect and (y) during any fiscal quarter ending during the period beginning on September 30, 2015 through and including March 31, 2018, the greater of (I) $100,000,000 and (II) 20% of the Borrowing Base then in effect, with the cash proceeds from and in an amount no greater than

 

3

the amount of such cash proceeds of (1) an Equity Offering, (2) Permitted Debt or Permitted Refinancing Debt or (3) any asset sale to the extent not required by this Agreement to be applied to repayment of Indebtedness and a concurrent reduction in the Commitments or (C) any Redemption of the Convertible Notes in an amount not to exceed an aggregate principal amount of $579,100;”

2.5 Amendment to Section 9.12(d)(iii) . Section 9.12(d) is hereby amended by deleting clause (iii) of such Section and replacing it with the following:

“(iii) if such sale or other disposition of Oil and Gas Property or Subsidiary owning Oil and Gas Properties included in the most recently delivered Reserve Report during any period between two successive Scheduled Redetermination Dates has an Engineered Value that, when aggregated with the Swap Termination Value, will exceed 5% of the amount of the then effective Borrowing Base (in each case, as reasonably determined by the Administrative Agent), individually or in the aggregate, then the Borrowing Base shall be reduced, effective immediately upon such sale or disposition, by an amount equal to the Engineered Value of such Oil and Gas Properties disposed of (as determined by the Administrative Agent and confirmed by the Super-Majority Lenders)”

Section 3. Borrowing Base . For the period from and including the Amendment Effective Date to but excluding the next Redetermination Date, the amount of the Borrowing Base shall be equal to Three Hundred Seventy-Five Million Dollars ($375,000,000). Notwithstanding the foregoing, the Borrowing Base may be subject to further adjustments from time to time pursuant to Sections 2.07(e), 8.12(b), 8.13(c), 9.12 and 9.19.

Section 4. Conditions Precedent . This Fourth Amendment shall not become effective until the date (the “ Amendment Effective Date ”) on which each of the following conditions is satisfied (or waived in accordance with Section 12.02):

4.1 The Administrative Agent shall have received from each of the Borrower, the Guarantors and Lenders constituting the Super-Majority Lenders, counterparts (in such number as may be requested by the Administrative Agent) of this Fourth Amendment signed on behalf of such Person.

4.2 The Administrative Agent shall have (a) received from the Borrower evidence that the Mortgaged Properties represent at least 80% of the total value of the proved Oil and Gas Properties evaluated in the most recently completed Reserve Report or (b) received supplemental mortgages or mortgage amendments or supplements sufficient for the Mortgaged Properties to represent at least 80% of the total value of the proved Oil and Gas Properties evaluated in the most recently completed Reserve Report.

4.3 The Administrative Agent and the Lenders shall have received all amounts due and payable on or prior to the Amendment Effective Date, including, to the extent invoiced, reimbursement or payment of all out-of-pocket expenses required to be reimbursed or paid by the Borrower under the Credit Agreement or hereunder.

 

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4.4 The Administrative Agent shall have received a certificate of the Secretary or an Assistant Secretary of the Borrower and each Guarantor setting forth (i) resolutions of its board of directors with respect to the authorization of the Borrower or such Guarantor to execute and deliver the Fourth Amendment and to enter into the transactions contemplated herein and in the other Loan Documents as amended hereby, (ii) the officers of the Borrower or such Guarantor (y) who are authorized to sign the Fourth Amendment, (iii) specimen signatures of such authorized officers, and (iv) the articles or certificate of incorporation and bylaws of the Borrower and such Guarantor, certified as being true and complete.

4.5 No Default or Event of Default shall have occurred and be continuing as of the date hereof, after giving effect to the terms of this Fourth Amendment.

4.6 The representations and warranties of the Borrower and the Guarantors set forth in the respective Loan Documents to which such Persons are party shall be true and correct in all material respects (or, to the extent any such representations and warranties are qualified by reference to materiality or Material Adverse Effect, such representations and warranties shall be true and correct in all respects) on and as of the date hereof, except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, such representations and warranties shall be true and correct in all material respects (or, to the extent any such representations and warranties are qualified by reference to materiality or Material Adverse Effect, such representations and warranties shall be true and correct in all respects) as of such specified earlier date.

The Administrative Agent is hereby authorized and directed to declare this Fourth Amendment to be effective, and shall deliver written notice of the Amendment Effective Date to Borrower, when the Administrative Agent has received documents confirming or certifying, to the reasonable satisfaction of the Administrative Agent, compliance with the conditions set forth in this Section 4 or the waiver of such conditions as permitted by the Credit Agreement. Such declaration shall be final, conclusive and binding upon all parties to the Credit Agreement for all purposes.

Section 5. Miscellaneous .

5.1 Confirmation . The provisions of the Credit Agreement, as amended by this Fourth Amendment, shall remain in full force and effect following the effectiveness of this Fourth Amendment. For the avoidance of doubt, this Fourth Amendment is a Loan Document.

5.2 Ratification and Affirmation; Representations and Warranties . The Borrower and each Guarantor hereby (a) acknowledges the terms of this Fourth Amendment; (b) ratifies and affirms its obligations under, and acknowledges, renews and extends its continued liability under, each Loan Document to which it is a party and agrees that each Loan Document to which it is a party remains in full force and effect, except as expressly amended hereby, notwithstanding the amendments contained herein; and (c) represents and warrants to the Lenders that as of the date hereof, after giving effect to the terms of this Fourth Amendment: (i)

 

5

all of the representations and warranties contained in each Loan Document to which it is a party are true and correct in all material respects (or, to the extent any such representations and warranties are qualified by reference to materiality or Material Adverse Effect, such representations and warranties shall be true and correct in all respects), except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, such representations and warranties shall be true and correct in all material respects (or, to the extent any such representations and warranties are qualified by reference to materiality or Material Adverse Effect, such representations and warranties shall be true and correct in all respects) as of such specified earlier date, and (ii) no Default or Event of Default has occurred and is continuing.

5.3 Release . The Borrower and each Guarantor, in consideration of the Administrative Agent’s and the undersigned Lenders’ execution and delivery of this Fourth Amendment and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, unconditionally, freely, voluntarily and, after consultation with counsel and becoming fully and adequately informed as to the relevant facts, circumstances and consequences, releases, waives and forever discharges (and further agrees not to allege, claim or pursue) any and all claims, rights, causes of action, counterclaims or defenses of any kind whatsoever, in contract, in tort, in law or in equity, whether known or unknown, direct or derivative, which the Borrower, each Guarantor or any predecessor, successor or assign might otherwise have or may have against the Administrative Agent, the Lenders, their present or former subsidiaries and affiliates or any of the foregoing’s officers, directors, employees, attorneys or other representatives or agents on account of any conduct, condition, act, omission, event, contract, liability, obligation, demand, covenant, promise, indebtedness, claim, right, cause of action, suit, damage, defense, circumstance or matter of any kind whatsoever which existed, arose or occurred at any time prior to the Amendment Effective Date relating to the Loan Documents, this Fourth Amendment and/or the transactions contemplated thereby or hereby. The foregoing release shall survive the termination of this Fourth Amendment.

5.4 Counterparts . This Fourth Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument. Delivery of this Fourth Amendment by facsimile or electronic transmission in portable document format (.pdf) shall be effective as delivery of a manually executed counterpart hereof.

5.5 NO ORAL AGREEMENT . THIS FOURTH AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND THEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR UNWRITTEN ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.

5.6 GOVERNING LAW . THIS FOURTH AMENDMENT (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

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5.7 Severability . Any provision of this Fourth Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

[SIGNATURES BEGIN NEXT PAGE]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Fourth Amendment to be duly executed as of the Amendment Effective Date.

 

BORROWER:     BILL BARRETT CORPORATION
    By:  

/s/ Robert W. Howard

    Name:   Robert W. Howard
    Title:   Chief Financial Officer
GUARANTORS:     CIRCLE B LAND COMPANY LLC
    AURORA GATHERING, LLC
    By:  

/s/ Robert W. Howard

    Name:   Robert W. Howard
    Title:   Chief Financial Officer

ADMINISTRATIVE AGENT      
    JPMORGAN CHASE BANK, N.A.
    By:  

/s/ David Morris

    Name:   David Morris
    Title:   Authorized Officer

LENDERS:     JPMORGAN CHASE BANK, N.A.
    By:  

/s/ David Morris

    Name:   David Morris
    Title:   Authorized Officer

BANK OF MONTREAL
By:  

/s/ Gumaro Tijerina

Name:   Gumaro Tijerina
Title:   Managing Director

WELLS FARGO BANK, N.A.
By:  

/s/ Suzanne Ridenhour

Name:   Suzanne Ridenhour
Title:   Director

BANK OF AMERICA, N.A.
By:  

/s/ Alia Qaddumi

Name:   Alia Qaddumi
Title:   Vice President

DEUTSCHE BANK AG NEW YORK BRANCH
By:  

/s/ Dusan Lazarov

Name:   Dusan Lazarov
Title:   Director
By:  

/s/ Michael Winters

Name:   Michael Winters
Title:   Vice President

COMPASS BANK
By:  

/s/ Gabriela Albino

Name:   Gabriela Albino
Title:   Vice President

SANTANDER BANK, N.A.
By:  

/s/ Aidan Lanigan

Name:   Aidan Lanigan
Title:   Senior Vice President
By:  

/s/ Puiki Lok

Name:   Puiki Lok
Title:   Vice President

THE BANK OF NOVA SCOTIA
By:  

/s/ Alan Dawson

Name:   Alan Dawson
Title:   Director

COMERICA BANK
By:  

/s/ Brandon M. White

Name:   Brandon M. White
Title:   Vice President

BOKF, NA dba Bank of Oklahoma
By:  

/s/ Parker Heikes

Name:   Parker Heikes
Title:   Vice President

CITIBANK, N.A.
By:  

/s/ Cliff Vaz

Name:   Cliff Vaz
Title:   Vice President

GOLDMAN SACHS BANK USA
By:  

/s/ Michelle Latzoni

Name:   Michelle Latzoni
Title:   Authorized Signatory

Exhibit 99.1

 

LOGO    Press Release

For immediate release

Company contact: Larry C. Busnardo, Senior Director, Investor Relations, 303-312-8514

Bill Barrett Corporation Announces Reaffirmation of $375 Million Borrowing Base, the

Sale of Non-Core Uinta Basin Properties for Cash Proceeds of $27 Million, and

Lower 2015 Capital Expenditure Guidance

 

  •   Borrowing base under the bank credit facility reaffirmed at $375 million with zero currently drawn

 

  •   Sale of non-core Uinta Basin properties for cash proceeds of $27 million enhances liquidity

 

  •   DJ Basin rig count being reduced from two rigs to one rig as a result of improvements in drilling and completion operations

 

  •   2015 capital expenditures reduced to $315-$325 million from $320-$350 million as a result of lower XRL well costs and increased drilling and completion efficiencies

 

  •   2015 production guidance range increased to 6.3-6.5 MMBoe from 6.1-6.5 MMBoe

DENVER – September 28, 2015 – Bill Barrett Corporation (the “Company”) (NYSE: BBG) today announced the following corporate update.

The Company announced today that its semi-annual borrowing base review has been completed with the bank group reaffirming the $375 million borrowing base related to its revolving credit facility maturing in April 2020. The credit facility has $375 million of commitments and there are currently no borrowings under the credit facility. As part of the redetermination process, the Company and its lender group agreed to amend the maintenance covenants in the revolving credit facility by replacing the leverage covenant limiting the maximum total debt to trailing twelve month EBITDAX 1 ratio of 4.0x with a covenant limiting the maximum senior secured debt to trailing twelve month EBITDAX ratio of 2.5x through March 31, 2018, after which, the leverage covenant reverts to a maximum total debt to trailing twelve month EBITDAX of 4.0x, as of June 30, 2018. In addition, an interest coverage ratio requirement was included, pursuant to which the ratio of EBITDAX to interest expense may not be less than 2.5 to 1.0 for each quarter through March 31, 2018.

The Company also announced that it has entered into a definitive agreement to sell certain non-core Uinta Basin properties for after-tax cash proceeds of approximately $27 million. The transaction is expected to close on or before November 30, 2015, with an effective date of September 1, 2015, and is subject to customary closing conditions and post-closing purchase price adjustments. The properties produced approximately 470 Boe/d during August 2015, had estimated proved reserves of 11 million barrels of oil equivalent (“MMBoe”) (9% proved developed) as of December 31, 2014 and included 17,632 net acres. Based on the Company’s internal estimates, the sale price amounts to over 10x estimated 2016 operating cash flow (excluding general and administrative expense) based on current strip pricing. The sale of the properties will not result in a reduction of the Company’s borrowing base related to its revolving credit facility.

Chief Executive Officer and President Scot Woodall commented, “We are pleased with the support of our lender group and believe that the reaffirmation of our borrowing base in the current commodity price environment is a testament to the high quality nature of our XRL assets. In addition, the sale of non-core properties at attractive metrics enhances our already strong liquidity position and further strengthens the balance sheet. We are well-positioned and remain focused on the items in our control as we retain the financial and operational flexibility to quickly adapt as conditions warrant. We remain financially well-positioned with an undrawn credit facility, a notable cash position, and favorable hedges that provide the financial capacity to navigate the current macro-economic environment.”

 

1   Earnings before interest expense, income taxes, depreciation, depletion, amortization, exploration expenses and other non-cash charges as defined in the credit facility

LOGO

 

Reflecting much improved drilling efficiencies, the Company will accomplish its planned activities in the Northeast (“NE”) Wattenberg area for the remainder of the year with a one-rig drilling program. The Company will reduce its operated rig count from two rigs to one rig after completing current drilling operations on a multi-well extended reach lateral (“XRL”) pad. This reduction is attributable to the continued improvement in XRL drilling and completion efficiencies in the DJ Basin that also results in realized cost savings. It is now anticipated that 2015 capital expenditures will approximate $315-$325 million, which is below the low-end of the previous guidance range of $320-$350 million. This is primarily a result of drilling times for XRL wells being reduced from an average of 17 days to approximately 10 days, associated cost reductions that have lowered well costs by 10% to approximately $5.6 million, and the timing of certain well completions. It is expected that 40 gross (39 net) XRL wells will be drilled in the NE Wattenberg area in 2015 compared to a previous estimate of 35-40 gross (28-32 net) XRL wells. The increase is attributable to the improved drilling efficiency and also higher working interests due to other owners in the wells electing to go non-consent. Reflecting the efficiency improvement, it is expected that approximately 30 XRL wells can be drilled per rig on an annual basis compared to a previous estimate of 20 XRL wells per rig. Based on the performance of the XRL drilling program, 2015 production guidance is being increased to 6.3-6.5 MMBoe from 6.1-6.5 MMBoe.

Mr. Woodall further stated, “We have worked diligently this year to reduce costs, increase our operational efficiency and improve returns in a challenging macro-economic environment and our operational team has responded to this challenge. Our focus on operational execution has resulted in a reduction of the time to drill an XRL well by 40%, including a recent best-in-class well that was drilled in 7.5 days. This operational focus results in improved capital efficiency, decreased capital expenditures for this year and lower operating costs, while allowing us to increase our 2015 production guidance range. As we look ahead to 2016, we are running a variety of operating plan scenarios and considering a range of commodity price assumptions to determine the appropriate level of capital spending as we look to preserve liquidity given the outlook for commodity prices.”

Capital expenditures for the remainder of 2015 are expected to be funded internally through operating cash flow, cash on hand, non-core asset divestitures and borrowings under the revolving credit facility.

The Company has not issued any shares under its previously announced “at-the-market” equity offering program and does not anticipate currently utilizing it due to market conditions.

The Company also plans to participate in the following investor events:

 

  •   September 29, 2015 – Chief Financial Officer and Treasurer, Robert W. Howard, will participate in investor meetings at the Deutsche Bank Energy 1x1 Corporate Days Conference. This event will not be webcast.

 

  •   September 30, 2015 – Mr. Howard will present at the Deutsche Bank Leveraged Finance Conference. This event will not be webcast.

An updated corporate presentation to be used at these events will be posted on the Company’s website at www.billbarrettcorp.com prior to market open on Tuesday, September 29, 2015.

 

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LOGO

 

Forward-Looking Statements

All statements in this press release, other than historical financial information, may be deemed to be 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 include statements relating to production guidance, the nature and amount of expected capital expenditures in 2015 and the sources of funding for those expenditures, the number of wells expected to be drilled, and the closing of the Uinta Basin property transaction.

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 due to, among other things: oil, NGL and natural gas price volatility, including regional price differentials; changes in operational and capital plans; changes in capital costs, operating costs, availability and timing of build-out of third party facilities for gathering, processing, refining and transportation; delays or other impediments to drilling and completing wells arising from political or judicial developments at the local, state or federal level, including voter initiatives related to hydraulic fracturing; development drilling and testing results; the potential for production decline rates to be greater than expected; regulatory delays, including seasonal or other wildlife restrictions on federal lands; exploration risks such as drilling unsuccessful wells; higher than expected costs and expenses, including the availability and cost of services and materials; unexpected future capital expenditures; economic and competitive conditions; debt and equity market conditions, including the availability and costs of financing to fund the Company’s operations; the ability to obtain industry partners to jointly explore certain prospects, and the willingness and ability of those partners to meet capital obligations when requested; declines in the values of our oil and gas properties resulting in impairments; changes in estimates of proved reserves; compliance with environmental and other regulations, including new emission control requirements; derivative and hedging activities; risks associated with operating in one major geographic area; the success of the Company’s risk management activities; title to properties; litigation; and environmental liabilities. Please refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 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 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 .

 

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