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Discretionary cash flow for the quarter was $190 million, and the company generated an operating margin of approximately $48 per barrel.Q1 production was 35,340 barrels of oil equivalent per day, which was comprised of 26,300 barrels per day of crude oil and 54 million cubic feet per day of natural gas. Oil production was 5% higher than the first quarter. Natural gas declined 3% as expected. Production from all 4 of the company's development projects grew in the second quarter. The Permian was up 16%, the Diatomite increased 11%, our New Steam Floods were up 16% and the Uinta grew by 4%. Next, I want to give you some specific updates on the Diatomite. As you well know, we've been implementing a number of operational changes in the field over the last 9 months. I would offer 3 observations and summarize the status of these changes. Number one, we worked diligently to improve our realtime surveillance in the field. Our objective here is to have the capability to monitor zonal isolation of our injection, to measure the productivity of all of our wells in realtime, and to monitor their mechanical integrity. Second, with our 2012 drilling, we now have was 300 completions in our cyclic rotation. We're currently optimizing the size and frequency of our injection cycles to limit the net dilation of the reservoir formation and thereby minimize wellbore stress. The response to this injection strategy from our new wells thus far is confirming our slightly tight curve, and we are encouraged that we have not seen any failures in the wells drilled in 2012. Number 3, we're very focused on developing the Diatomite in a more continuous manner. This means that we have to conduct drilling operations on well pads immediately adjacent to areas that may contain active steam. We're working with other engineering companies to develop this capability that will give us full development flexibility going forward, and eliminate the need to stop injection in neighboring areas as we drill new wells or replacement wells.
So in summary, our results indicate that the Diatomite is starting to work again as we delivered consecutive monthly production increases in the second quarter. As you are aware, March production was at a low level, and in fact, our Q2 average was up about 35% over March.I'll ask Michael Duginski to discuss the rest of the company's operations momentarily. I would point out that we've continued to experience some processing concerns in the Permian and some project management issues on our New Steam Floods. I would classify these, along with the starting point for the quarter in the Diatomite as a timing issue, and these issues are not related to reservoir performance. However, when we take all these together, they have lowered our full year guidance to approximately 37,000 barrels a day for 2012, which represents 13% oil growth for the year. Now let me turn the floor over to David Wolf, who will provide additional details in our financial performance for the quarter. David D. Wolf Thanks, Bob. For the second quarter of 2012, oil and gas revenues were $222 million. Oil revenues were $211 million. Gas revenues were $11 million. Total revenues, including electricity sales, gas marketing and other items were $230 million. Our realized oil price per barrel averaged $90.08. Average realized natural gas price was $2.22 per MCF. That gave us an average BOE sales price, including cash derivative settlements, of $70.40. Oil and gas operating costs for the second quarter were $19.42 per BOE. Production taxes were $3.01. DD&A was $16.18 per BOE. G&A was $5.59 and interest expense is $6.46 per BOE. Total cost for the quarter averaged $50.66, in line with guidance. Read the rest of this transcript for free on seekingalpha.com