When Scot Woodall, the CEO and president of Denver’s Bill Barrett Corp. decided the oil and gas company needed to change direction, he went to see Bill Barrett himself, the legendary wildcatter who put his stamp on the Rocky Mountain region across the decades.
The company’s name was synonymous with natural gas plays across the Rocky Mountain region.
But for the last several years, the market has favored public companies that produced oil — not natural gas.
“Five years ago we were 96 percent a natural gas company and I thought, that’s not right,” Woodall said.
“We thought we had to buy and sell nearly all our portfolio to become more oily. It’s something that’s easier said than done.”
Over the last three years, Bill Barrett — the company — sold about $2 billion worth of assets. The last deal, a $110 million sale of the company’s remaining assets in northeastern Utah, was announced in November 2017.
A few weeks later, in December 2017, the company announced the last piece of its transition: A $649 million deal to merge with privately held Fifth Creek Energy, based in Greenwood Village, and form a new company, now called HighPoint Resources Corp. (NYSE: HPR).
HighPoint’s focus will be producing oil from Colorado’s Denver-Julesburg Basin, which sprawls north and east of Denver to beyond the state lines.
The basin is considered among the top handful of oil and gas basins in the United States, but it’s also been marked by controversy as drilling rigs intermingle with fast-growing suburban communities along the northern Front Range.
But Woodall said it made sense to focus for the new company to focus on the basin.
“We’re headquartered in Denver and the DJ fits what everyone wants — it’s been around for 100 years, and it’s still being developed in new ways,” Woodall said.
“Most people thought it would be dead in the ‘50s or ‘80s, but it’s still alive.”
With a break-even cost for most of the basin estimated to be at $30 to $35 per barrel of oil, it’s still in the top five basins on the economic side too, he said.
“It’s the right place to be doing business,” he said.
Woodall is proud of the company’s transition.
Bill Barrett started with $1.4 billion in debt. HighPoint now has about $300 million — an 80 percent reduction in debt.
Its assets are about 65 to 70 percent oil, and HighPoint’s acreage is clustered in two contiguous blocks east and northeast of Greeley — in rural Colorado, far from the populous Front Range.
One of the blocks, along the Colorado-Wyoming border and called the Hereford Field, includes the Jake well drilled by EOG Resources in 2009, the horizontal well that kicked off the state’s recent boom in oil investment and production.
“We feel really good about where the company sits. The Fifth Creek position was perfect,” Woodall said.
But in the beginning, Woodall knew had to run his plan for a new direction by Mr. Barrett.
“Out of respect for him, I wanted to let him know what we planned,” Woodall said.
So they sat down, and …
“He was totally fine with it. He said they’d been out looking for gas but the world has changed. It’s not so much looking for new resources as much as exploiting the resources that are found at the lowest cost,” Woodall said.
“With HighPoint, you’re getting to the high point, the culmination of the company — and building from there.”
The switch from Bill Barrett and Fifth Creek to a merged HighPoint took place in 48 hours, after months of planning.
The merger garnered 98 percent approval from shareholders on Friday, March 16, and closed the following Monday.
On Tuesday, the Fifth Creek employees moved from its Greenwood Village office to HighPoint’s downtown offices on 17th Street.
The following day, a Wednesday, the two groups held their first company-wide meeting — complete with the new logo emblazoned on hats, T-shirts, pencils, pens, and new email signatures, Woodall said.
Three weeks later, HighPoint had a drilling rig and fracking fleet working on its new assets along the Wyoming-Colorado border.
Woodall credits his team for the smooth merger of the two companies.
“I’d lay awake at night thinking and making a list of things. Then, I’d come in with the list and people told me they took care of that [item] last week, or that a meeting was scheduled on that [item] next week,” he said.
Everyone in both companies interviewed for a new position at HighPoint, and the company currently has about 115 people in Denver, with an additional 50 or so working in the field. HighPoint also is hiring, Woodall said.
As for the future, Woodall is confident about focusing the company’s efforts on Colorado — despite its reputation for strict, industry-leading oil and gas regulations, and conflicts over drilling rigs in suburban communities.
There’s no doubt, Woodall said, that the state’s reputation weighs on the stock price of the companies that work here.
“Every time we go on the road people want to know what’s going to change here in Colorado’s regulations,” said Woodall.
Woodall is familiar with recent changes. He was a member of Gov. John Hickenlooper’s oil and gas task force in 2014-15 that put forward a series of new recommendations that were adopted to mandate more communication between energy companies and local communities.
And he believes the oil and gas industry has a future in the state due to its long history, and its multibillion-dollar place in the economy.
“Colorado’s politics can be a headache and create uncertainty, this state is the noisiest on the political side of any of the top 10 oil and gas states — but all that aside, we’ve never been shut down or stopped or seen regulations that would stop us from executing our plans. You’d like to think that going forward the wages and taxes and jobs make us worthwhile to the state,” he said.
“We do things better when we compromise and work together. We’ve found a way to co-exist and I think we’ll find ways to do that in the future.”