Bill Barrett Corporation (BBG) Bombs on Wednesday

NEW YORK (TheStreet) -- Denver oil explorer Bill Barrett Corporation (BBG) plummeted 15.1% to $23.51 on Wednesday after weak output guidance prompted Global Hunter Securities to downgrade the stock.

After the bell Tuesday, the oiler reported full-year production of 14.5 million barrels of oil equivalent (boe), a 30% year-over-year increase. The company also said it had proved reserves of 197 million boe, including 88% growth in reserves at three active oil programs.

Bill Barrett achieved a better-balanced commodity mix over 203, with exit rate production 40% oil and 58% liquids including NGLs.

To the year ahead, the company plans to spend between $500 million and $550 million in capital expenditures, participating in around 200 gross development wells (including 85 wells in the DJ Basin which will receive 75% of total capital).

"In 2014, we will continue to focus investment capital in our most profitable programs. We anticipate attractive returns and well payback economics on drilling and completion costs in each of the DJ Basin, East Bluebell and Powder Deep," said CEO Scott Woodall.

However, the company expects to produce between 11 million and 12.2 million boe in 2014, less than estimated production of 14.5 million boe in 2013. Additionally, analysts had hoped for 50% growth in oil production, far higher than growth of 30% management forecast.

In response, Global Hunter cut shares to "neutral" from "accumulate" and lowered its price target to $30 from $35.

TheStreet Ratings team rates BILL BARRETT CORP as a Hold with a ratings score of C-. The team has this to say about their recommendation:

"We rate BILL BARRETT CORP (BBG) a HOLD. The primary factors that have impacted our rating are mixed -- some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its solid stock price performance and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and generally higher debt management risk."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • Compared to its closing price of one year ago, BBG's share price has jumped by 77.86%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, our hold rating indicates that we do not recommend additional investment in this stock despite its gains in the past year.
  • The gross profit margin for BILL BARRETT CORP is currently very high, coming in at 71.50%. It has increased from the same quarter the previous year. Regardless of the strong results of the gross profit margin, the net profit margin of -111.36% is in-line with the industry average.
  • BBG, with its decline in revenue, underperformed when compared the industry average of 1.4%. Since the same quarter one year prior, revenues fell by 17.2%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • BILL BARRETT CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, BILL BARRETT CORP reported lower earnings of $0.01 versus $0.64 in the prior year. For the next year, the market is expecting a contraction of 5400.0% in earnings (-$0.53 versus $0.01).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 216.7% when compared to the same quarter one year ago, falling from -$52.63 million to -$166.66 million.

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