Tickers in this Article: BBG, WMB, WPZ, ECA
Bill Barrett Corporation (NYSE:BBG) continued to resist the siren call of crude oil and other liquids in 2010, as the company developed its substantial natural gas assets in the western United States. The company plans to continue this strategy in 2011.

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2010 Review
While many of its peers in the exploration and production industry have reoriented capital programs towards the development of oil and other liquid hydrocarbons, Bill Barrett Corporation stuck with natural gas in 2010.

Bill Barrett Corporation reported production of 96.5 Bcfe in 2010, 93% of which was natural gas. This was a 8% increase over 2009 production. Production from the company's properties in the Piceance and Uinta Basins represented 78% of production in 2010.

Bill Barrett Corporation reported proved reserves of 1.1 Tcfe at the end of 2010, a 16% increase over last year. These proved reserves are also concentrated in the Piceance and Uinta Basins, with 91% of proved reserves from these two areas. Bill Barrett Corporation spent $473 million in capital expenditures in 2010 to explore and develop its properties.

The Piceance Basin is an active area for natural gas development in the United States. Other exploration and production companies active there are EnCana Corporation (NYSE:ECA), which has 869,000 net acres and drilled 120 wells here as of 2010. The company reported production of 440 million cubic feet equivalent per day in 2010.

Williams (NYSE:WMB) is also a large operator in the Piceance Basin, and has approximately 220,000 net acres under lease. The company produced an average 682 million cubic feet of natural gas equivalents per day in the third quarter of 2010. Williams also owned substantial midstream assets here but recently sold then to Williams Partners (NYSE:WPZ) for $782 million.

2011 Plans
Bill Barrett Corporation has allocated between $525 million and $565 million in capital in 2011 for exploration and development of its properties. The company's main area of focus in 2011 will be the West Tavaputs development project, where it will drill 100 gross wells during the year.

Bill Barrett Corporation has been active in the West Tavaputs development project for many years and has drilled 184 wells here within the previous eight years. In September 2010, the company received drilling permits for additional areas at the field, based on a review of the required Environmental Impact Statement (EIS). Bill Barrett Corporation estimates that proved, probable and possible reserves here total 1.3 Tcfe, with 25% of this total already booked in the proved category.

The Bottom Line
Bill Barrett Corporation estimates that its rate of return from wells in West Tavaputs will be 38%, even in the current depressed process for natural gas. Bill Barrett Corporation worked to develop its natural gas assets in the Rocky Mountains in 2010, and this focus paid off with growth in production and proved reserves during the year. The company will continue this strategy in 2011. (For additional stock analysis, see Natural Gas Forecast.)

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