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Berry Petroleum Announces Results For First Quarter Of 2012

Stocks in this article: BRY

David Wolf, executive vice president and chief financial officer, stated, “Berry's financial position remains strong. We successfully completed a $600 million 6.375% senior note offering during the first quarter using the proceeds to reduce borrowings under our credit facility, retire $200 million of our 8.25% senior subordinated notes and tender for $150 million of our 10.25% senior notes. These transactions allowed us to increase the weighted average maturity of our debt by three years while keeping our cash run rate of interest expense flat. Our liquidity was also improved by these transactions and is over $800 million today. On April 13, 2012, we completed a credit facility redetermination increasing our borrowing base to $1.4 billion with commitments from our lenders remaining at $1.2 billion."

2012 Guidance                  
For 2012 the Company is issuing the following per BOE guidance:
Anticipated range in 2012 Three Months 3/31/2012
Operating costs — oil and natural gas production $ 17.00 - 19.50 17.31
Production taxes 2.75 - 3.50 3.40
DD&A — oil and natural gas production 15.00 - 18.00 15.30
General and administrative 4.25 - 5.50 5.66
Interest expense 5.50   - 6.25 6.41
Total $ 44.50   - 52.75 $ 48.08

Teleconference Call

An earnings conference call will be held Thursday, April 26, 2012 at 10:00 a.m. Eastern Time (8:00 a.m. Mountain Time). Dial 866-788-0544 to participate, using passcode 32492644. International callers may dial 857-350-1682. For a digital replay available until May 3, 2012 dial 888-286-8010 passcode 79131579. Listen live or via replay on the web at

Non-GAAP Financial Measures

This press release includes discussion of “discretionary cash flow,” “adjusted net earnings,” and “operating margin per BOE,” each of which are “non-GAAP financial measures” as defined in Regulation G of the Securities Exchange Act of 1934, as amended. Discretionary cash flow consists of cash provided by operating activities before changes in working capital items. The Company believes that discretionary cash flow as a measure of liquidity and believes it provides useful information to investors because it assesses cash flow from operations for each period before changes in working capital, which fluctuates due to the timing of collections of receivables and the settlements of liabilities. Adjusted net earnings consists of net earnings before non-cash derivatives gains (losses), oil and natural gas property impairments and charges related to the extinguishment of debt. The Company believes that adjusted net earnings are useful for evaluating the Company's operational performance from oil and natural gas properties. Operating margin per BOE consists of oil and natural gas revenues less oil and natural gas operating expenses and production taxes divided by the total BOE sold during the period. The Company uses operating margin per barrel as a measure of profitability and believes it provides useful information to investors because it relates the Company's oil and natural gas revenue and oil and natural gas operating expenses to its total units of production providing a gross margin per unit of production, allowing investors to evaluate how our profitability varies on a per unit basis each period. These measures should not be considered in isolation or as a substitute for their most directly comparable GAAP measures. Other companies calculate non-GAAP measures differently and, therefore, the non-GAAP measures presented in this release may not be comparable to similarly titled measures used by other companies.

Explanation and Reconciliation of Non-GAAP Financial Measures        
Discretionary Cash Flow ($ millions):
Three Months Ended
Net cash provided by operating activities $ 155.4
Net increase in current assets 10.5
Net increase in current liabilities including book overdraft (19.7 )
Cash settlements from early termination of natural gas derivatives (14.7 )
Discretionary cash flow $ 131.5  
Adjusted Net Earnings ($ millions):      
Three Months Ended
Adjusted net earnings $ 50.3
After tax adjustments:
Non-cash derivative loss (26.6 )
Early termination of natural gas derivatives 9.1
Gain on sale of assets 1.1  
Net earnings, as reported $ 33.9  
Operating Margin Per BOE:                
Three Months Ended Three Months Ended
3/31/2012 12/31/2011
Average sales price including cash derivative settlements $ 74.44 $ 68.80
Operating cost - oil and natural gas production 17.31 18.11
Production taxes 3.40   2.64
Operating margin $ 53.73   $ 48.05

About Berry Petroleum Company

Berry Petroleum Company is a publicly traded independent oil and natural gas production and exploitation company with operations in California, Colorado, Texas and Utah. The Company uses its web site as a channel of distribution of material company information. Financial and other material information regarding the Company is routinely posted on and accessible at

Safe harbor under the “Private Securities Litigation Reform Act of 1995”

Any statements in this news release that are not historical facts are forward-looking statements that involve risks and uncertainties. Words such as “estimate,” “expect,” “would,” “will,” “target,” “goal,” “potential,” and forms of those words and others indicate forward-looking statements. These statements include but are not limited to forward-looking statements about the expectations of plans, strategies, objectives and anticipated financial and operating results of the Company, including the Company’s drilling program, production, and other guidance included in this press release. These statements are based on certain assumptions made by the Company based on management’s experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. Important factors which could affect actual results are discussed in the Company’s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

(In thousands, except per share data)
Three Months Ended
3/31/2012 12/31/2011
Sales of oil and natural gas $ 233,653 $ 227,298
Sales of electricity 5,980 10,750
Natural gas marketing 1,859 2,550
Gain on sale of assets 1,763
Interest and other income, net 747   391  
244,002 240,989
Operating costs - oil and natural gas production 54,252 59,634
Operating costs - electricity generation 5,017 5,720
Production taxes 10,658 8,691
Depreciation, depletion & amortization - oil and natural gas production 47,956 55,202
Depreciation, depletion & amortization - electricity generation 466 484
Natural gas marketing 1,777 2,563
General and administrative 17,741 14,604
Interest 20,104 19,512
Dry hole, abandonment, impairment and exploration 3,036 4,685
Extinguishment of debt 1,152
Realized and unrealized loss on derivatives, net 28,481 112,529
Impairment of oil and natural gas properties   625,564  
189,488   910,340  
Earnings (loss) before income taxes 54,514 (669,351 )
Income tax provision (benefit) 20,616   (254,618 )
Net earnings (loss) $ 33,898   $ (414,733 )
Basic net earnings (loss) per share $ 0.62   $ (7.62 )
Diluted net earnings (loss) per share $ 0.61   $ (7.62 )
Dividends per share $ 0.080   $ 0.080  
(In thousands)
          3/31/2012           12/31/2011
Current assets 206,189 167,634
Oil and natural gas properties, (successful efforts basis) buildings and equipment, net 2,650,904 2,531,393
Derivative instruments 276 7,027
Other assets 36,831   28,898
$ 2,894,200   $ 2,734,952
Current liabilities 252,210 231,173
Deferred income taxes 207,992 185,450
Long-term debt 1,449,290 1,380,192
Derivative instruments 19,338 15,505
Other long-term liabilities 86,833 81,903
Shareholders’ equity 878,537   840,729
$ 2,894,200   $ 2,734,952
(In thousands)
          Three Months Ended
3/31/2012           12/31/2011
Cash flows from operating activities:
Net earnings (loss) $ 33,898 $ (414,733 )
Depreciation, depletion and amortization 48,422 55,686
Gain on sale of assets (1,763 )
Extinguishment of debt 695
Amortization of debt issuance costs and net discount 2,037 1,982
Impairment of oil and natural gas properties 625,564
Dry hole and impairment 28 4,300
Derivatives 42,837 110,589
Stock-based compensation expense 3,104 2,185
Deferred income taxes 16,567 (254,375 )
Other, net 683 1,695
Allowance for bad debt 315
Change in book overdraft (509 ) (5,515 )
Net changes in operating assets and liabilities 9,787   (44,064 )
Net cash provided by operating activities 155,406   84,009  
Cash flows from investing activities:
Exploration and development of oil and natural gas properties (167,758 ) (102,968 )
Property acquisitions (8,529 ) (2,647 )
Capitalized interest (5,190 ) (4,881 )
Proceeds from sale of assets 15,700
Deposits on asset sales (3,300 ) 3,300  
Net cash used in investing activities (169,077 ) (107,196 )
Net cash provided by financing activities 57,369   23,391  
Net increase (decrease) in cash and cash equivalents 43,698 204
Cash and cash equivalents at beginning of period 298   94  
Cash and cash equivalents at end of period $ 43,996   $ 298  
          Three Months Ended
3/31/2012           12/31/2011         Change
Oil and natural gas:
Heavy oil production (BOE/D) 17,005 17,497
Light oil production (BOE/D) 8,091   8,166  
Total oil production (BOE/D) 25,096 25,663
Natural gas production (Mcf/D) 56,105   60,759  
Total (BOE/D) 34,447 35,790
Oil and natural gas, per BOE:
Average realized sales price $ 74.33 $ 69.29 7 %
Average sales price including cash derivative settlements 74.44 68.80 8 %
Oil, per BOE:
Average WTI price $ 103.03 $ 94.06 10 %
Price sensitive royalties (4.24 ) (3.63 )
Quality differential and other (1.48 ) 4.75
Oil derivatives non-cash amortization (1.14 ) (6.76 )
Oil revenue per BOE $ 96.17   $ 88.42   9 %
Add: Oil derivatives non-cash amortization 1.14 6.76
Oil derivative cash settlements (3.08 ) (8.89 )
Average realized oil price $ 94.23   $ 86.29   9 %
Natural gas price:
Average Henry Hub price per MMBtu $ 2.72 $ 3.54 (23 )%
Conversion to Mcf 0.18 0.21
Natural gas derivatives non-cash amortization (0.01 )
Location, quality differentials and other (0.30 ) (0.24 )
Natural gas revenue per Mcf $ 2.59   $ 3.51   (26 )%
Natural gas derivatives non-cash amortization 0.01
Natural gas derivative cash settlements 0.92   0.61  
Average realized natural gas price per Mcf $ 3.52   $ 4.12   (15 )%
Operating cost - oil and natural gas production per BOE $ 17.31 $ 18.11 (4 )%
Production taxes per BOE 3.40   2.64  
Total operating costs per BOE $ 20.71 $ 20.75 %
DD&A - oil and natural gas production per BOE 15.30 16.77 (9 )%
General & administrative per BOE 5.66 4.44 27 %
Interest expense per BOE $ 6.41 $ 5.93 8 %

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