Berry Petroleum Corporation (NASDAQ: BRY) (“Berry” or the
“Company”) today reported net income of $32 million or $0.39 per
diluted share and adjusted net income of $20 million or $0.25 per
diluted share for the second quarter of 2019. In addition, the
Board approved a regular $0.12 per share dividend for the third
quarter of 2019.
Highlights for the Quarter
- Adjusted EBITDA of $63 million and Unhedged Adjusted EBITDA of
$66 million
- Received Aquifer Exemption for California Midway-Sunset field;
no regulatory hurdles remain
- 1.0 million shares repurchased; 3.6 million cumulative or 4% of
total outstanding
- Capital Expenditures of $57 million with approximately 92%
directed to California oil development
- Current California oil production is up over 1,300 Bbl/day or
6.5% compared to June
- Layered on additional 2020 oil hedges; approximately 12,000
Bbl/Day at $65.70/Bbl Brent
- Full-year production and spending are on track; no changes to
guidance
Trem Smith, Berry Petroleum board chair, chief executive officer
and president stated, “Berry continues to generate significant
intrinsic value for our shareholders. We are always focused on
protecting and growing our base production. As planned, the ongoing
development of our California oil assets has positioned us to
realize considerable value growth through production increases for
the remainder of 2019 and beyond. In planning for this robust
second half growth, we drilled 210 wells in the first half of the
year, of which 133 of them will begin to contribute to production
in the second half of the year. As our 6.5% growth in current
production indicates, some have already started to contribute. In
fact, current California production has substantially increased
compared to June and we expect to see this continue through the
remainder of the year.”
“Since going public a year ago, Berry has declared $47 million
in dividends; repurchased 4% of its shares and grown California
production by 11% over the past twelve months. This has been done
from our free cash flow. At Berry, we will continue to execute as
promised, always managing to value and returning capital to
shareholders as key components to our strategy.”
Second Quarter Results
Adjusted EBITDA, on an unhedged basis, was $66 million in the
second quarter compared to $54 million in the first quarter.
Relative to the first quarter, the second quarter had higher oil
prices and lower operating expenses largely due to lower fuel
costs, partially offset by higher taxes other than income taxes.
Additionally, the decrease in Adjusted EBITDA, on a hedged basis,
from $69 million in the first quarter compared to $63 million in
the second quarter includes the impact of lower oil hedge
settlements received and higher gas hedge settlement payments.
Actual production was 1% higher in the second quarter compared
to the first quarter. Sales volumes, which includes the impact of
inventory fluctuations, was 1% lower quarter-over-quarter, due to
selling of inventory in the Rockies in the first quarter.
California oil prices before hedges for the second quarter
averaged 93% of Brent, or $63.91/Bbl which were 8% higher than the
$59.16/Bbl realized in the first quarter. Realized oil prices for
the Company before hedges of $61.69/Bbl were 8% higher than the
first quarter average of $56.88/Bbl.
For the second quarter, Operating Expenses ("OpEx") decreased to
$20.38/Boe compared to $21.71/Boe in the first quarter. This
decrease was largely driven by the price of natural gas we
purchased for our steam operations during the second quarter, which
decreased by $6.86/Boe, partially offset by settled gas hedge
losses which increased by $2.93/Boe. OpEx consists of lease
operating expenses ("LOE"), as well as expenses and third-party
revenues from electricity generation, transportation and marketing
activities and the effect of derivative settlements (received or
paid) for gas purchases while excluding taxes other than income
taxes.
General and administrative expenses were $16.2 million for the
second quarter compared to $14.3 million for the first quarter. The
second quarter was affected by higher non-cash stock compensation
associated with the annual grant of stock awards in March. Adjusted
general and administrative expenses were $4.92/Boe for the second
quarter compared to $4.63/Boe for the first quarter primarily due
to organizational growth and system enhancements.
Taxes, other than income taxes were $4.54/Boe for the second
quarter compared to $3.23/Boe in the first quarter, due to higher
greenhouse gas unit costs and the impact of severance tax refunds
in the first quarter.
Capital expenditures totaled $57 million for the second quarter
compared to $49 million for the first quarter and was largely
focused on California drilling in both periods. The 2019 capital
program was front-end loaded resulting in more wells drilled in the
first half of the year than the amount expected to be drilled in
the second half. The Company expects that a significant portion of
the 210 wells drilled in the first six months of 2019 will generate
robust growth in the last half of the year as they come online or
realize the full effects of steam injection.
Net income for the second quarter 2019 was $32 million compared
to a net loss of $34 million in the first quarter and this
difference was largely driven by derivative mark-to-market changes.
Adjusted net income was $20 million for the second quarter compared
to $24 million for the first quarter of 2019. The decrease was due
to the same factors affecting Adjusted EBITDA.
At July 31, our liquidity under our $400 million reserve-based
revolver was $371 million as we had $9 million of outstanding
letters of credit and borrowed $20 million on our revolver to fund
monthly working capital fluctuations and the $11 million spent on
share repurchases during the second quarter. The Company expects to
have no revolver borrowings by year-end.
Dividend Announcement
On July 25, 2019 the Board declared a regular dividend for the
third quarter at a rate of $0.12 per share on the Company’s
outstanding common stock. This is the Company's fifth regular
quarterly dividend, and the Company, subject to approval by the
Board, intends to pay a similar dividend in future quarters.
The third quarter dividend is payable on October 15, 2019 to
shareholders of record at the close of business on September 13,
2019.
SEC Filing Announcement
On August 9, the Company expects to file a universal shelf
registration statement on Form S-3 with the SEC. The Company
currently has no plans for an offering. The Company also expects to
file a post-effective amendment to the Form S-1 registration
statement it maintains for certain stockholders who held the
Company’s stock prior to the Company’s IPO. The amendment
will convert the Form S-1 to the simpler Form S-3, which
incorporates future filings by reference. The number of securities
registered is not increasing.
Earnings Conference Call
The Company will host a conference call August 8, 2019 to
discuss these results:
Live Call Date: |
Thursday, August 8, 2019 |
Live Call Time: |
11:00 a.m. Eastern Time (8
a.m. Pacific Time) |
Live Call Dial-in: |
877-491-5169 from the
U.S. |
|
720-405-2254 from
international locations |
Live Call Passcode: |
5797269 |
|
|
A live audio webcast will be available on the “Investors”
section of Berry’s website
at berrypetroleum.com/investors.
An audio replay will be available shortly after the
broadcast:
Replay Dates: |
Through Thursday, August 22,
2019 |
Replay Dial-in: |
855-859-2056 from the
U.S. |
|
404-537-3406 from
international locations |
Replay Passcode: |
5797269 |
|
|
A replay of the audio webcast will also be archived on the
“Investors” section of Berry’s website
at berrypetroleum.com/investors. In addition, an investor
presentation will be available on the Company’s website.
About Berry Petroleum
Berry Petroleum Corporation is a publicly-traded (NASDAQ:BRY)
western United States independent upstream energy company with a
focus on the conventional, long-lived oil reserves in the San
Joaquin basin of California. More information can be found at the
Company’s website at www.berrypetroleum.com.
Forward Looking Statements
The information in this press release includes
forward-looking statements that involve risks and uncertainties
that could materially affect our expected results of operations,
liquidity, cash flows and business prospects. Such statements
specifically include our expectations as to our future:
- financial position,
- liquidity,
- cash flows,
- results of operations and business strategy,
- potential acquisition opportunities,
- other plans and objectives for operations,
- maintenance capital requirements,
- expected production and costs,
- reserves,
- hedging activities,
- return of capital,
- capital investments and other guidance.
Actual results may differ from expectations,
sometimes materially, and reported results should not be considered
an indication of future performance. Factors (but not all the
factors) that could cause results to differ include:
- volatility of oil, natural gas and natural gas liquids (NGL)
prices;
- our ability to obtain permits and otherwise to meet our
proposed drilling schedule and to successfully drill wells that
produce oil and natural gas in commercially viable quantities;
- price and availability of natural gas;
- changes in laws or regulations;
- our ability to use derivative instruments to manage commodity
price risk;
- the impact of environmental, health and safety, and other
governmental regulations, and of current or pending or future
legislation;
- uncertainties associated with estimating proved reserves and
related future cash flows;
- our ability to replace our reserves through exploration and
development activities;
- timely and available drilling and completion equipment and crew
availability and access to necessary resources for drilling,
completing and operating well;
- our ability to make acquisitions and successfully integrate any
acquired businesses; and
- other material risks that appear in the Risk Factors section of
the prospectus filed with the SEC in connection with our initial
public offering.
You can typically identify forward-looking
statements by words such as aim, anticipate, achievable, believe,
continue, could, estimate, expect, forecast, goal, guidance,
intend, likely, may, might, objective, outlook, plan, potential,
predict, project, seek, should, target, will or would and other
similar words that reflect the prospective nature of events or
outcomes. We undertake no responsibility to publicly release the
result of any revision of our forward-looking statements after the
date they are made.
TABLES FOLLOWING
The financial information and certain other
information presented have been rounded to the nearest whole number
or the nearest decimal. Therefore, the sum of the numbers in a
column may not conform exactly to the total figure given for that
column in certain tables. In addition, certain percentages
presented here reflect calculations based upon the underlying
information prior to rounding and, accordingly, may not conform
exactly to the percentages that would be derived if the relevant
calculations were based upon the rounded numbers, or may not sum
due to rounding.
SUMMARY OF RESULTS
|
Three Months Ended |
|
June 30, 2019 |
|
March 31, 2019 |
|
June 30, 2018 |
|
($ and shares in thousands, except per share amounts) |
Statement of
Operations Data: |
|
|
|
|
|
Revenues and
other: |
|
|
|
|
|
Oil, natural gas and natural gas liquids sales |
$ |
136,908 |
|
|
$ |
131,102 |
|
|
$ |
137,385 |
|
Electricity sales |
5,364 |
|
|
9,729 |
|
|
5,971 |
|
Gains (losses) on oil derivatives |
27,276 |
|
|
(65,239 |
) |
|
(78,143 |
) |
Marketing revenues |
414 |
|
|
830 |
|
|
518 |
|
Other revenues |
104 |
|
|
117 |
|
|
251 |
|
Total revenues and other |
170,066 |
|
|
76,539 |
|
|
65,982 |
|
|
|
|
|
|
|
Expenses and
other: |
|
|
|
|
|
Lease operating expenses |
47,879 |
|
|
57,928 |
|
|
41,517 |
|
Electricity generation expenses |
3,164 |
|
|
7,760 |
|
|
3,135 |
|
Transportation expenses |
1,694 |
|
|
2,173 |
|
|
2,343 |
|
Marketing expenses |
421 |
|
|
851 |
|
|
407 |
|
General and administrative expenses |
16,158 |
|
|
14,340 |
|
|
12,482 |
|
Depreciation, depletion and amortization |
23,654 |
|
|
24,585 |
|
|
21,859 |
|
Taxes, other than income taxes |
11,348 |
|
|
8,086 |
|
|
8,715 |
|
(Gains) losses on natural gas derivatives |
9,449 |
|
|
(2,115 |
) |
|
— |
|
Other operating expenses |
3,119 |
|
|
1,245 |
|
|
123 |
|
Total expenses and other |
116,886 |
|
|
114,853 |
|
|
90,581 |
|
|
|
|
|
|
|
Other income
(expenses): |
|
|
|
|
|
Interest expense |
(8,961 |
) |
|
(8,805 |
) |
|
(9,155 |
) |
Other, net |
— |
|
|
154 |
|
|
(239 |
) |
Total other income (expenses) |
(8,961 |
) |
|
(8,651 |
) |
|
(9,394 |
) |
Reorganization items, net |
(26 |
) |
|
(231 |
) |
|
456 |
|
Income (loss) before
income taxes |
44,193 |
|
|
(47,196 |
) |
|
(33,537 |
) |
Income tax expense
(benefit) |
12,221 |
|
|
(13,098 |
) |
|
(5,476 |
) |
Net income
(loss) |
31,972 |
|
|
(34,098 |
) |
|
(28,061 |
) |
Series A preferred stock
dividends |
— |
|
|
— |
|
|
(5,650 |
) |
Net income (loss)
attributable to common stockholders |
$ |
31,972 |
|
|
$ |
(34,098 |
) |
|
$ |
(33,711 |
) |
|
|
|
|
|
|
Net income (loss) per
share attributable to common stockholders |
|
|
|
|
|
Basic |
$ |
0.39 |
|
|
$ |
(0.42 |
) |
|
$ |
(0.94 |
) |
Diluted |
$ |
0.39 |
|
|
$ |
(0.42 |
) |
|
$ |
(0.94 |
) |
|
|
|
|
|
|
Weighted-average common shares
outstanding - basic |
81,519 |
|
|
81,765 |
|
|
35,873 |
|
Weighted-average common shares
outstanding - diluted |
81,683 |
|
|
81,765 |
|
|
35,873 |
|
|
|
|
|
|
|
Adjusted net income
(loss) |
$ |
20,046 |
|
|
$ |
24,264 |
|
|
$ |
14,831 |
|
Adjusted EBITDA |
$ |
62,756 |
|
|
$ |
68,502 |
|
|
$ |
50,018 |
|
Adjusted EBITDA unhedged |
$ |
66,082 |
|
|
$ |
53,598 |
|
|
$ |
78,279 |
|
Levered free cash flow |
$ |
(12,560 |
) |
|
$ |
526 |
|
|
$ |
(3,319 |
) |
Levered free cash flow
unhedged |
$ |
(9,234 |
) |
|
$ |
(14,378 |
) |
|
$ |
24,942 |
|
Adjusted general and
administrative expenses |
$ |
12,277 |
|
|
$ |
11,587 |
|
|
$ |
9,508 |
|
Effective Tax Rate |
28 |
% |
|
28 |
% |
|
16 |
% |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
June 30, 2019 |
|
March 31, 2019 |
|
June 30, 2018 |
|
($ in thousands) |
Cash Flow
Data: |
|
|
|
|
|
Net cash provided by (used in)
operating activities |
$ |
71,362 |
|
|
$ |
19,111 |
|
|
$ |
(77,394 |
) |
Net cash provided by (used in)
investing activities |
$ |
(56,574 |
) |
|
$ |
(50,805 |
) |
|
$ |
(22,472 |
) |
Net cash provided by (used in)
financing activities |
$ |
(16,223 |
) |
|
$ |
(35,324 |
) |
|
$ |
34,538 |
|
|
June 30, 2019 |
|
December 31, 2018 |
|
($ and shares in thousands) |
Balance Sheet
Data: |
|
|
|
Total current assets |
$ |
107,293 |
|
|
$ |
229,022 |
|
Total property, plant and
equipment, net |
$ |
1,526,004 |
|
|
$ |
1,442,708 |
|
Total current liabilities |
$ |
134,519 |
|
|
$ |
144,118 |
|
Long-term debt |
$ |
397,315 |
|
|
$ |
391,786 |
|
Total equity |
$ |
952,316 |
|
|
$ |
1,006,446 |
|
Outstanding common stock
shares as of |
80,973 |
|
|
81,202 |
|
|
|
|
|
|
|
SUMMARY BY AREA
The following table shows a summary by area of
our selected historical financial information and operating data
for the periods indicated.
|
California (San Joaquin and Ventura basins) |
|
Rockies (Uinta and Piceance basins) |
|
Three Months Ended |
|
Three Months Ended |
|
June 30, 2019 |
|
March 31, 2019 |
|
June 30, 2018 |
|
June 30, 2019 |
|
March 31, 2019 |
|
June 30, 2018 |
($ in thousands, except prices) |
|
|
|
|
|
|
|
|
|
|
|
Oil, natural gas and natural gas liquids sales |
$ |
120,917 |
|
|
$ |
111,896 |
|
|
$ |
117,288 |
|
|
$ |
15,991 |
|
|
$ |
19,206 |
|
|
$ |
20,097 |
|
Operating income(a) |
$ |
47,809 |
|
|
$ |
37,357 |
|
|
$ |
60,014 |
|
|
$ |
954 |
|
|
$ |
4,779 |
|
|
$ |
4,858 |
|
Depreciation, depletion, and
amortization (DD&A) |
$ |
20,460 |
|
|
$ |
21,342 |
|
|
$ |
18,001 |
|
|
$ |
3,194 |
|
|
$ |
3,244 |
|
|
$ |
3,140 |
|
Average daily production
(MBoe/d) |
20.8 |
|
|
21.0 |
|
|
18.8 |
|
|
6.6 |
|
|
6.8 |
|
|
7.7 |
|
Production (oil % of
total) |
100 |
% |
|
100 |
% |
|
100 |
% |
|
41 |
% |
|
46 |
% |
|
30 |
% |
Realized sales prices: |
|
|
|
|
|
|
|
|
|
|
|
Oil (per Bbl) |
$ |
63.91 |
|
|
$ |
59.16 |
|
|
$ |
68.72 |
|
|
$ |
44.92 |
|
|
$ |
41.38 |
|
|
$ |
61.64 |
|
NGLs (per Bbl) |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
16.86 |
|
|
$ |
24.42 |
|
|
$ |
24.38 |
|
Gas (per Mcf) |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
2.16 |
|
|
$ |
3.77 |
|
|
$ |
2.12 |
|
Capital expenditures |
$ |
52,374 |
|
|
$ |
42,509 |
|
|
$ |
34,537 |
|
|
$ |
1,443 |
|
|
$ |
5,313 |
|
|
$ |
3,735 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
__________(a) Operating income comprises oil,
natural gas and NGL sales, offset by operating expenses, general
and administrative expenses, DD&A, and taxes, other than income
taxes.
COMMODITY PRICING
|
Three Months Ended |
|
June 30, 2019 |
|
March 31, 2019 |
|
June 30, 2018 |
Realized Sales Prices
(weighted-average) |
|
|
|
|
|
Oil without hedge ($/Bbl) |
$ |
61.69 |
|
|
$ |
56.88 |
|
|
$ |
67.93 |
|
Effects of scheduled
derivative settlements ($/Bbl) |
$ |
0.13 |
|
|
$ |
5.15 |
|
|
$ |
(14.71 |
) |
Oil with hedge ($/Bbl) |
$ |
61.82 |
|
|
$ |
62.03 |
|
|
$ |
53.22 |
|
Natural gas ($/Mcf) |
$ |
2.16 |
|
|
$ |
3.83 |
|
|
$ |
2.12 |
|
NGLs ($/Bbl) |
$ |
16.86 |
|
|
$ |
24.35 |
|
|
$ |
24.38 |
|
|
|
|
|
|
|
Index
Prices |
|
|
|
|
|
Brent oil ($/Bbl) |
$ |
68.47 |
|
|
$ |
63.83 |
|
|
$ |
74.97 |
|
WTI oil ($/Bbl) |
$ |
59.86 |
|
|
$ |
54.87 |
|
|
$ |
67.85 |
|
Kern, Delivered natural gas
($/MMBtu)(a) |
$ |
2.07 |
|
|
$ |
5.03 |
|
|
$ |
2.23 |
|
|
|
|
|
|
|
|
|
|
|
|
|
__________(a) Kern Delivered Index is the relevant index used
for gas purchases in California.
CURRENT HEDGING SUMMARY
As of June 30, 2019, we had the following
crude oil production and gas purchases hedges, with no changes
through July 31, 2019.
|
Q3 2019 |
|
Q4 2019 |
|
FY 2020 |
Sold Oil Call Options
(Brent): |
|
|
|
|
|
Hedged volume (MBbls) |
92 |
|
|
92 |
|
|
— |
|
Weighted average price ($/Bbl) |
$ |
81.00 |
|
|
$ |
81.00 |
|
|
$ |
— |
|
Purchased Oil Put
Options (Brent): |
|
|
|
|
|
Hedged volume (MBbls) |
460 |
|
|
460 |
|
|
— |
|
Weighted-average price ($/Bbl) |
$ |
50.00 |
|
|
$ |
50.00 |
|
|
$ |
— |
|
Fixed Price Oil Swaps
(Brent): |
|
|
|
|
|
Hedged volume (MBbls) |
1,472 |
|
|
1,380 |
|
|
4,392 |
|
Weighted average price ($/Bbl) |
$ |
72.64 |
|
|
$ |
72.21 |
|
|
$ |
65.70 |
|
Fixed Price Oil Swaps
(WTI): |
|
|
|
|
|
Hedged volume (MBbls) |
92 |
|
|
92 |
|
|
121 |
|
Weighted average price ($/Bbl) |
$ |
61.75 |
|
|
$ |
61.75 |
|
|
$ |
61.75 |
|
Oil basis differential
positions (Brent-WTI basis swaps): |
|
|
|
|
|
Hedged volume (MBbls) |
46 |
|
|
46 |
|
|
— |
|
Weighted average price ($/Bbl) |
$ |
(1.29 |
) |
|
$ |
(1.29 |
) |
|
$ |
— |
|
Fixed Price Gas
Purchase Swaps (Kern, Delivered): |
|
|
|
|
|
Hedged volume (MMBtu) |
4,600,000 |
|
|
4,295,000 |
|
|
13,725,000 |
|
Weighted average price ($/MMBtu) |
$ |
2.91 |
|
|
$ |
2.95 |
|
|
$ |
2.98 |
|
Fixed Price Gas
Purchase Swaps (SoCal Citygate): |
|
|
|
|
|
Hedged volume (MMBtu) |
460,000 |
|
|
460,000 |
|
|
1,525,000 |
|
Weighted average price ($/MMBtu) |
$ |
3.80 |
|
|
$ |
3.80 |
|
|
$ |
3.80 |
|
|
|
|
|
|
|
|
|
|
|
|
|
OPERATING EXPENSES
|
Three Months Ended |
|
June 30, 2019 |
|
March 31, 2019 |
|
June 30, 2018 |
|
($ in thousands except per Boe amounts) |
Lease operating expenses |
$ |
47,879 |
|
|
$ |
57,928 |
|
|
$ |
41,517 |
|
Electricity generation
expenses |
3,164 |
|
|
7,760 |
|
|
3,135 |
|
Electricity sales(a) |
(5,364 |
) |
|
(9,729 |
) |
|
(5,971 |
) |
Transportation expenses |
1,694 |
|
|
2,173 |
|
|
2,343 |
|
Transportation sales(a) |
(104 |
) |
|
(117 |
) |
|
(251 |
) |
Marketing expenses |
421 |
|
|
851 |
|
|
407 |
|
Marketing revenues(a) |
(414 |
) |
|
(830 |
) |
|
(518 |
) |
Derivative settlements
(received) paid for gas purchases(a) |
3,593 |
|
|
(3,724 |
) |
|
— |
|
Total operating expenses(a) |
$ |
50,869 |
|
|
$ |
54,312 |
|
|
$ |
40,662 |
|
|
|
|
|
|
|
Lease operating expenses
($/Boe) |
$ |
19.18 |
|
|
$ |
23.16 |
|
|
$ |
17.24 |
|
Electricity generation
expenses ($/Boe) |
1.27 |
|
|
3.10 |
|
|
$ |
1.30 |
|
Electricity sales ($/Boe) |
(2.15 |
) |
|
(3.89 |
) |
|
$ |
(2.48 |
) |
Transportation expenses
($/Boe) |
0.68 |
|
|
0.87 |
|
|
$ |
0.97 |
|
Transportation sales
($/Boe) |
(0.04 |
) |
|
(0.05 |
) |
|
(0.09 |
) |
Marketing expenses
($/Boe) |
0.17 |
|
|
0.34 |
|
|
$ |
0.17 |
|
Marketing revenues
($/Boe) |
(0.17 |
) |
|
(0.33 |
) |
|
$ |
(0.22 |
) |
Derivative settlements
(received) paid for gas purchases ($/Boe) |
1.44 |
|
|
(1.49 |
) |
|
— |
|
Total operating expenses ($/Boe) |
$ |
20.38 |
|
|
$ |
21.71 |
|
|
$ |
16.89 |
|
|
|
|
|
|
|
Total MBoe |
|
2,497 |
|
|
|
2,501 |
|
|
|
2,408 |
|
|
|
|
|
|
|
__________(a) We report electricity,
transportation and marketing sales separately in our financial
statements as revenues in accordance with GAAP. However, these
revenues are viewed and used internally in calculating operating
expenses which is used to track and analyze the economics of
development projects and the efficiency of our hydrocarbon
recovery. We purchase third-party gas to generate electricity
through our cogeneration facilities to be used in our field
operations activities and view the added benefit of any excess
electricity sold externally as a cost reduction/benefit to
generating steam for our thermal recovery operations. Marketing
expenses mainly relate to natural gas purchased from third parties
that moves through our gathering and processing systems and then is
sold to third parties. Transportation sales, reported in "Other
Revenues", relates to water and other liquids that we transport on
our systems on behalf of third parties.
PRODUCTION STATISTICS
|
Three Months Ended |
|
June 30, 2019 |
|
March 31, 2019 |
|
June 30, 2018 |
Net Oil, Natural Gas
and NGLs Production Per
Day(a): |
|
|
|
|
|
Oil
(MBbl/d) |
|
|
|
|
|
California |
20.8 |
|
21.0 |
|
18.8 |
Rockies |
2.7 |
|
3.1 |
|
2.3 |
East Texas(c) |
— |
|
— |
|
— |
Total oil |
23.5 |
|
24.1 |
|
21.1 |
Natural gas
(MMcf/d) |
|
|
|
|
|
California |
— |
|
— |
|
— |
Rockies |
20.8 |
|
19.5 |
|
23.2 |
East Texas(c) |
— |
|
— |
|
4.8 |
Total natural gas |
20.8 |
|
19.5 |
|
28.0 |
NGLs
(MBbl/d) |
|
|
|
|
|
California |
— |
|
— |
|
— |
Rockies |
0.4 |
|
0.4 |
|
0.7 |
East Texas(c) |
— |
|
— |
|
— |
Total NGLs |
0.4 |
|
0.4 |
|
0.7 |
Total Production
(MBoe/d)(b) |
27.4 |
|
27.8 |
|
26.5 |
|
|
|
|
|
|
__________(a) Production represents volumes sold
during the period.(b) Natural gas volumes have been converted to
Boe based on energy content of six Mcf of gas to one Bbl of oil.
Barrels of oil equivalence does not necessarily result in price
equivalence. The price of natural gas on a barrel of oil equivalent
basis is currently substantially lower than the corresponding price
for oil and has been similarly lower for a number of years. For
example, in the three months ended June 30, 2019, the average
prices of Brent oil and Henry Hub natural gas were $68.47 per Bbl
and $2.57 per MMBtu, respectively, resulting in an oil-to-gas ratio
of approximately 4 to 1 on an energy equivalent basis.(c) On
November 30, 2018, we sold our non-core gas-producing properties
and related assets located in the East Texas basin.
CAPITAL EXPENDITURES (ACCRUAL BASIS)
|
Three Months Ended |
|
June 30, 2019 |
|
March 31, 2019 |
|
June 30, 2018 |
|
(in thousands) |
Capital expenditures (accrual basis) |
$ |
56,645 |
|
|
$ |
49,099 |
|
|
$ |
38,531 |
|
|
|
|
|
|
|
|
|
|
|
|
|
NON-GAAP FINANCIAL MEASURES AND
RECONCILIATIONS
Adjusted EBITDA and Adjusted Net Income (Loss)
are not measures of net income (loss) and Levered Free Cash Flow is
not a measure of cash flow, in all cases, as determined by GAAP.
Adjusted EBITDA, Adjusted Net Income (Loss) and Levered Free Cash
Flow are supplemental non-GAAP financial measures used by
management and external users of our financial statements, such as
industry analysts, investors, lenders and rating agencies.
We define Adjusted EBITDA as earnings before
interest expense; income taxes; depreciation, depletion, and
amortization; derivative gains or losses net of cash received or
paid for scheduled derivative settlements; impairments; stock
compensation expense; and other unusual, out-of-period and
infrequent items, including restructuring costs and reorganization
items. We define Levered Free Cash Flow as Adjusted EBITDA less
capital expenditures, interest expense and dividends.
Our management believes Adjusted EBITDA provides
useful information in assessing our financial condition, results of
operations and cash flows and is widely used by the industry and
the investment community. The measure also allows our management to
more effectively evaluate our operating performance and compare the
results between periods without regard to our financing methods or
capital structure. Levered Free Cash Flow is used by management as
a primary metric to plan capital allocation for maintenance and
internal growth opportunities, as well as hedging needs. It also
serves as a measure for assessing our financial performance and our
ability to generate excess cash from operations to service debt and
pay dividends.
Adjusted Net Income (Loss) excludes the impact
of unusual, out-of-period and infrequent items affecting earnings
that vary widely and unpredictably, including non-cash items such
as derivative gains and losses. This measure is used by management
when comparing results period over period. We define Adjusted Net
Income (Loss) as net income (loss) adjusted for derivative gains or
losses net of cash received or paid for scheduled derivative
settlements, other unusual, out-of-period and infrequent items,
including restructuring costs and reorganization items and the
income tax expense or benefit of these adjustments using our
effective tax rate.
While Adjusted EBITDA, Adjusted Net Income
(Loss) and Levered Free Cash Flow are non-GAAP measures, the
amounts included in the calculation of Adjusted EBITDA, Adjusted
Net Income (Loss) and Levered Free Cash Flow were computed in
accordance with GAAP. These measures are provided in addition to,
and not as an alternative for, income and liquidity measures
calculated in accordance with GAAP. Certain items excluded from
Adjusted EBITDA are significant components in understanding and
assessing our financial performance, such as our cost of capital
and tax structure, as well as the historic cost of depreciable and
depletable assets. Our computations of Adjusted EBITDA, Adjusted
Net Income (Loss) and Levered Free Cash Flow may not be comparable
to other similarly titled measures used by other companies.
Adjusted EBITDA, Adjusted Net Income (Loss) and Levered Free Cash
Flow should be read in conjunction with the information contained
in our financial statements prepared in accordance with GAAP.
Adjusted General and Administrative Expenses is
a supplemental non-GAAP financial measure that is used by
management. We define Adjusted General and Administrative Expenses
as general and administrative expenses adjusted for restructuring
and other non-recurring costs and non-cash stock compensation
expense. Management believes Adjusted General and Administrative
Expenses is useful because it allows us to more effectively compare
our performance from period to period.
We exclude the items listed above from general
and administrative expenses in arriving at Adjusted General and
Administrative Expenses because these amounts can vary widely and
unpredictably in nature, timing, amount and frequency and stock
compensation expense is non-cash in nature. Adjusted General and
Administrative Expenses should not be considered as an alternative
to, or more meaningful than, general and administrative expenses as
determined in accordance with GAAP. Our computations of Adjusted
General and Administrative Expenses may not be comparable to other
similarly titled measures of other companies.
ADJUSTED NET INCOME (LOSS)
The following table presents a reconciliation of
the GAAP financial measure of net income (loss) to the non-GAAP
financial measure of Adjusted Net Income (Loss).
|
Three Months Ended |
|
June 30, 2019 |
|
March 31, 2019 |
|
June 30, 2018 |
|
($ thousands, except per share amounts) |
Net income (loss) |
$ |
31,972 |
|
|
$ |
(34,098 |
) |
|
$ |
(28,061 |
) |
|
|
|
|
|
|
Add (Subtract): |
|
|
|
|
|
(Gains) losses on oil and natural gas derivatives |
(17,827 |
) |
|
63,124 |
|
|
78,143 |
|
Net cash received (paid) for scheduled derivative settlements |
(3,326 |
) |
|
14,904 |
|
|
(28,261 |
) |
Other operating expenses |
3,119 |
|
|
1,245 |
|
|
123 |
|
Restructuring and other non-recurring costs |
1,513 |
|
|
1,329 |
|
|
1,714 |
|
Reorganization items, net |
26 |
|
|
231 |
|
|
(456 |
) |
Total additions, net |
(16,495 |
) |
|
80,833 |
|
|
51,263 |
|
|
|
|
|
|
|
Income tax (expense) benefit
of adjustments at effective tax rate |
4,569 |
|
|
(22,471 |
) |
|
(8,371 |
) |
Adjusted net income
(loss) |
$ |
20,046 |
|
|
$ |
24,264 |
|
|
$ |
14,831 |
|
|
|
|
|
|
|
Basic EPS on adjusted
income |
$ |
0.25 |
|
|
$ |
0.30 |
|
|
$ |
0.41 |
|
Diluted EPS on adjusted net
income |
$ |
0.25 |
|
|
$ |
0.30 |
|
|
$ |
0.20 |
|
|
|
|
|
|
|
Weighted average shares
outstanding - basic |
81,519 |
|
|
81,765 |
|
|
35,873 |
|
Weighted average shares
outstanding - diluted |
81,683 |
|
|
81,973 |
|
|
73,588 |
|
|
|
|
|
|
|
|
|
|
ADJUSTED EBITDA AND ADJUSTED EBITDA
UNHEDGED
The following tables present a reconciliation of
the GAAP financial measures of net income (loss) and net cash
(used) by operating activities to the non-GAAP financial measures
of Adjusted EBITDA and Adjusted EBITDA Unhedged.
|
Three Months Ended |
|
June 30, 2019 |
|
March 31, 2019 |
|
June 30, 2018 |
|
($ thousands) |
Net income (loss) |
$ |
31,972 |
|
|
$ |
(34,098 |
) |
|
$ |
(28,061 |
) |
Add (Subtract): |
|
|
|
|
|
Interest expense |
8,961 |
|
|
8,805 |
|
|
9,155 |
|
Income tax expense (benefit) |
12,221 |
|
|
(13,098 |
) |
|
(5,476 |
) |
Depreciation, depletion and amortization |
23,654 |
|
|
24,585 |
|
|
21,859 |
|
Derivative (gain) loss |
(17,827 |
) |
|
63,124 |
|
|
78,143 |
|
Net cash received (paid) for scheduled derivative settlements |
(3,326 |
) |
|
14,904 |
|
|
(28,261 |
) |
Other operating expense |
3,119 |
|
|
1,245 |
|
|
123 |
|
Stock compensation expense |
2,443 |
|
|
1,475 |
|
|
1,278 |
|
Restructuring and other non-recurring costs |
1,513 |
|
|
1,329 |
|
|
1,714 |
|
Reorganization items, net |
26 |
|
|
231 |
|
|
(456 |
) |
Adjusted EBITDA |
$ |
62,756 |
|
|
$ |
68,502 |
|
|
$ |
50,018 |
|
Net cash (received) paid for
scheduled derivative settlements |
3,326 |
|
|
(14,904 |
) |
|
28,261 |
|
Adjusted EBITDA unhedged |
$ |
66,082 |
|
|
$ |
53,598 |
|
|
$ |
78,279 |
|
|
|
|
|
|
|
Net cash provided (used) by
operating activities(1) |
71,362 |
|
|
19,111 |
|
|
(77,394 |
) |
Add (Subtract): |
|
|
|
|
|
Cash interest payments |
1,272 |
|
|
14,000 |
|
|
644 |
|
Cash reorganization item (receipts) payments |
— |
|
|
— |
|
|
1,047 |
|
Restructuring and other non-recurring costs |
1,513 |
|
|
1,329 |
|
|
1,714 |
|
Derivative early termination payment |
— |
|
|
— |
|
|
126,949 |
|
Other changes in operating assets and liabilities |
(11,391 |
) |
|
34,063 |
|
|
(2,942 |
) |
Adjusted EBITDA |
$ |
62,756 |
|
|
$ |
68,502 |
|
|
$ |
50,018 |
|
Net cash (received) paid for
scheduled derivative settlements |
3,326 |
|
|
(14,904 |
) |
|
28,261 |
|
Adjusted EBITDA unhedged |
$ |
66,082 |
|
|
$ |
53,598 |
|
|
$ |
78,279 |
|
|
|
|
|
|
|
|
|
|
|
|
|
__________(1) The three months ended March 31,
2019 included $37 million of annual or semi-annual payments that
occur in the first quarter each year such as semi-annual interest
and certain annual royalty payments and other accrued
liabilities.
LEVERED FREE CASH FLOW
The following table presents a reconciliation of
Adjusted EBITDA to the non–GAAP measures of Levered free cash
flow. The reconciliation of Adjusted EBITDA is presented above.
|
Three Months Ended |
|
June 30, 2019 |
|
March 31, 2019 |
|
June 30, 2018 |
|
($ thousands) |
Adjusted EBITDA |
$ |
62,756 |
|
|
$ |
68,502 |
|
|
$ |
50,018 |
|
Subtract: |
|
|
|
|
|
Capital expenditures - accrual basis |
(56,645 |
) |
|
(49,099 |
) |
|
(38,531 |
) |
Interest expense |
(8,961 |
) |
|
(8,805 |
) |
|
(9,155 |
) |
Cash dividends declared |
(9,710 |
) |
|
(10,072 |
) |
|
(5,651 |
) |
Levered free cash flow |
$ |
(12,560 |
) |
|
$ |
526 |
|
|
$ |
(3,319 |
) |
Net cash (received) paid for
scheduled derivative settlements |
3,326 |
|
|
(14,904 |
) |
|
28,261 |
|
Levered free cash flow
unhedged |
$ |
(9,234 |
) |
|
$ |
(14,378 |
) |
|
$ |
24,942 |
|
ADJUSTED GENERAL AND ADMINISTRATIVE
EXPENSES
The following table presents a reconciliation of the GAAP
financial measure of general and administrative expenses to the
non-GAAP financial measures of Adjusted general and administrative
expenses.
|
Three Months Ended |
|
June 30, 2019 |
|
March 31, 2019 |
|
June 30, 2018 |
|
($ in thousands except per MBoe amounts) |
General and administrative expenses |
$ |
16,158 |
|
|
$ |
14,340 |
|
|
$ |
12,482 |
|
Subtract: |
|
|
|
|
|
Restructuring and other non-recurring costs |
(1,513 |
) |
|
(1,329 |
) |
|
(1,714 |
) |
Non-cash stock compensation expense (G&A portion) |
(2,368 |
) |
|
(1,424 |
) |
|
(1,260 |
) |
Adjusted general and
administrative expenses |
$ |
12,277 |
|
|
$ |
11,587 |
|
|
$ |
9,508 |
|
|
|
|
|
|
|
General and administrative
expenses ($/MBoe) |
$ |
6.47 |
|
|
$ |
5.73 |
|
|
$ |
5.18 |
|
Subtract: |
|
|
|
|
|
Restructuring and other non-recurring costs ($/MBoe) |
(0.61 |
) |
|
(0.53 |
) |
|
(0.71 |
) |
Non-cash stock compensation expense ($/MBoe) |
(0.95 |
) |
|
(0.57 |
) |
|
(0.52 |
) |
Adjusted general and
administrative expenses ($/MBoe) |
$ |
4.92 |
|
|
$ |
4.63 |
|
|
$ |
3.95 |
|
|
|
|
|
|
|
Total MBoe |
2,497 |
|
|
2,501 |
|
|
2,408 |
|
|
|
|
|
|
|
|
|
|
Contact: Berry Petroleum Corporation
Todd Crabtree - Manager, Investor Relations
(661) 616-3811
ir@bry.com
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