Imperial Capital Sees Bill Barrett Driving 'Considerable' EBITDA Growth

Bill Barrett Corporation BBG, an independent energy company that develops, acquires and explores for oil and natural gas resources in the DJ Basin of Colorado, could see its stock move higher by 75 percent, according to analysts at Imperial Capital.

The Analyst

Imperial Capital's Jason Wangler upgraded Bill Barrett's stock from In-Line to Outperform with a price target boosted from $6 to $9.

The Thesis

The bullish case for owning Bill Barrett's stock is mostly due to its pending acquisition of Fifth Creek Energy, Wangler said in a note. Specifically, the acquisition is likely to result in incremental production, cash flow growth and an increase in future drilling inventory.

Over the long-term, Bill Barrett has nearly 3,000 gross undeveloped locations that boast good economics, the analyst said. This should satisfy s Bill Barrett's continued growth beyond 2019 as it could provide approximately 15 years of drilling inventory. Given a now "better understanding" of the company's activity, coupled with the potential from its Niobrara assets in the future could result in a "considerable" EBITDA growth of three-fold by 2019 from 2017's levels.

The company's cash balance of around $300 million as of the end of 2017 should be sufficient to allow for an "oustpend" year in 2018, but the amount of spending will narrow into 2019 which will help keep leverage low.

Price Action

Shares of Bill Barrett were trading higher by around 2 percentat $5.28.

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