Bill Barrett Corporation (BBG)

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Bill Barrett Corporation (BBG)

Q2 FY08 Earnings Call

August 5, 2008, 12:00 PM ET


Jennifer Martin - Director of IR

Fredrick J. Barrett - CEO and Chairman

Robert W. Howard - CFO and Treasurer

Joseph N. Jaggers - President and COO


Tom Gardner - Simmons & Company

Michael Hall - Stifel Nicolaus

Brian Singer - Goldman Sachs

David Tameron - Wachovia Securities

Larry Busnardo - Tristone Capital

Leonard Benedetto - Howard Weil

Eric Hagen - Merrill Lynch



Good day, ladies and gentlemen and welcome to the Second Quarter 2008 Bill Barrett Corporation Conference call. My name is Marsha and I will be your coordinator for today's call. At this time, all participants are in a listen-only mode. We will conduct a question-and-answer session towards the end of this conference. [Operator Instructions]. As a reminder, this conference is being recorded for replay purposes.

I would now like to turn the call over to Ms. Jennifer Martin, Director of Investor Relations. You may proceed.

Jennifer Martin - Director of Investor Relations

Thank you, Marsha. Good morning or afternoon to those of you on the East Coast and welcome to the Bill Barrett Corporation conference call. Today, we will review second quarter 2008 operating and financial results, and provide an update on our current operating activities.

We had a terrific quarter and to talk more about that today we have Fred Barrett, Chairman and Chief Executive Officer, who'll open with an overview; Bob Howard, Chief Financial Officer, who will review financial results; and finally Joe Jaggers, President and Chief Operating Officer, who is joining us from Texas. Joe will review operations and provide an update on our development, delineation, and exploration program, and Fred will follow up with some closing remarks.

I have a few items to mention before we get started. We have prepared a user-controlled slideshow that accompanies our discussion. It is available with the webcast or can be printed from the homepage of the website at Look around on the left side of the page and click under Current Events, second quarter 2008 result earnings call slides.

In addition, we filed our 10-Q this morning. It is also available on our website. I would also like to mention that we will be participating in a couple of upcoming conferences. Fred Barrett will present at the EnerCom Conference here in Denver, this Monday, the 11th at 8 Mountain Time, 10 Eastern and Fred will also speak at the Lehman Conference on September 4th at 11:45. So please join us for those events via webcast.

I do need to remind everyone to look at the forward-looking statement and cautionary statement disclosures on slide two of our presentation, which were also included in our press release today.

During our discussion, we make reference to discretionary cash flow, which is a non-GAAP measure. Reconciliation to the appropriate GAAP measure was also provided in the press release today. And we will also discuss 3P or proved profitable and possible resources; please note the disclosure statement on slide seven.

With that, I will turn it over to Fred Barrett to get started. Fred?

Fredrick J. Barrett - Chief Executive Officer and Chairman

Thank you, Jennifer. Welcome everyone and thank you for joining us today. I have some brief introductory highlights. You can see those on slide number three, and we'll expand on those highlights in more detail along with some other highlights in Bob's financial discussion and Joe's operational update.

Our development programs continued to perform exceedingly well. The second quarter results like our first quarter metrics are highlighted by record levels including a 28% increase in production, a 100% increase in cash flow and a 243% increase in our earnings.

Our performance year-to-date has led to the following positive adjustments. First, it has allowed to again increase the upper end of production guidance, which is now 77 to 80 Bcfe for 2008. This equates to 2008 growth of 26 to 31% over 2007.

Secondly, it demonstrates continued improvement in our operational efficiencies, translating to improved margins and as a result, we are lowering our LOE guidance frames to 62 to $0.65 per Mcfe.

And thirdly, as a result of drilling efficiencies of less powder foots [ph] and the addition of a fifth rig later this month in the Piceance, we do expect to increase our well count this year in both of these core areas. As such, we've increased our estimate of capital expenditures for 2008, which we now expect to fall between $625 million and $650 million, a nominal increase of $50 million, again earmarked for further low risk growth in these development areas.

Exploration activities are on track. We are in full swing via the drill-bit. Our excitement does continue to mount here at the company, and with more details to follow from Joe, I would just briefly highlight the following.

We are eagerly awaiting a pullback results on our first horizontal shale gas completion at Yellow Jacket. We continue to move forward on our deep drilling program at Cave Gulch and we continue to see encouraging performance from key Blacktail Ridge wells in the Uinta.

In parallel, we continue to expand our Rocky shale gas exposure through the second quarter having commenced drilling at two new projects; one at the Southwest Montana Circus shale gas program, and the second, at our up shale gas prospect in the Uinta Basin.

Our encouragement continues to build on the exploration front and with the strong likelihood of continued performance at our developments programs; we are very well positioned for an exception year in 2008.

Before I say more on the remainder of 2008, let me pass it over to Bob for added detail on the financial status of Bill Barrett Corporation. Bob?

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