Bill Barrett Corp. (NYSE: BBG) is paring down its portfolio to sharpen its focus on the Niobrara Shale in the Denver-Julesburg (D-J) Basin.

The Denver company said May 2 it entered into an agreement with an unaffiliated third-party to sell certain noncore assets in the Uinta Basin for $30 million. The assets have estimated proved reserves of 2 million barrels of oil equivalent (MMboe), 87% of which is proved developed, as of year-end 2015.

The purchase price—in cash—is solid given the current environment, said Jason Wangler, equity analyst with Wunderlich Securities Inc.

“This deal is another example of that and given the 2016 cash flows from the assets were expected to be $2 million the 15x multiple looks pretty positive while the $30,000/flowing boe and $15/proven boe figures are also positive,” Wangler said in a report.

Proceeds from the sale will be used to strengthen the company’s balance sheet by adding to its cash position, said Scot Woodall, Bill Barrett's CEO and president.

The sale also continues Bill Barrett’s focus on its D-J Basin acreage and is an incremental addition of cash at a time when “cash is truly king,” Wangler said.

“This $30 million should add nice incremental cash that the company can use to continue to develop its D-J Basin assets or possibly look to reduce its term debt,” he said.

At year-end 2015, Bill Barrett had more than $125 million in cash, an undrawn facility and $800 million in term debt. During its spring redetermination, the borrowing base on the company’s facility took an 11% hit, dropping to $335 million from $375 million.

Bill Barrett projects a $100 million to $150 million capital budget for 2016. Although its projected budget is 55% less capital in 2015, the company expects to sustain production at “levels similar” to last year, according to Woodall.

In 2016, Bill Barrett plans production between 5.8-6.2 MMboe, 65% oil, 20% natural gas and 15% NGL. About 65% of the company’s oil production in 2016 is hedged at $80.47 per barrel.

“Further, due to BBG’s lower spending rates and strong hedge book, we think (the company’s) relatively small 2016 outspend could give BBG an opportunity to bring in its term debt, which would bode well for the company's future,” Wangler said.

During the past few years, Bill Barrett has shown an ability to monetize assets and bring in “considerable cash proceeds,” he added.

In December, Bill Barrett said it discarded noncore properties in the Uinta and D-J basins to undisclosed buyers. The company gained about $56 million of net cash proceeds from the sale.

Bill Barrett holds more than 120,000 net acres in the Uinta. In a January investor presentation, the company said it was in the midst of discussion with interested parties regarding potential sales.

The properties being sold produced about 1,000 boe/d, 63% oil, during the first quarter of 2016.

“The divestiture will minimally impact our 2016 production and cash flow, while improving our operating cost structure due to the higher-cost nature of the properties,” Woodall said in the release.

The transaction is expected to close on or before June 30, and is subject to customary closing conditions. Wells Fargo Securities LLC advised Bill Barrett on the divestiture process.

Emily Moser can be reached at emoser@hartenergy.com.

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