Berry Corporation (bry) (NASDAQ:BRY) (the “Company” or “Berry”)
today provided updated guidance in response to current market
conditions. As of March 31, 2020, the Company has:
- Reduced planned 2020 capital expenditures by approximately 50%
from original 2020 budget midpoint of guidance, which is a nearly
70% reduction from 2019 actual
- Targeted 2020 production as being flat to down 2% from 2019,
which is consistent with our low corporate decline rate
- Temporarily suspended its regular quarterly dividend until oil
prices recover
- Reduced non-employee annualized General and Administrative
expenses by more than $5 million
- Enhanced its hedge portfolio with nearly 100% of California oil
hedged in 2020 and additional 2021 hedge positions, resulting in a
total hedge book worth more than $187 million
- Visibility to an estimated 2020 year-end cash balance, based on
March 23, 2020 strip and current differentials, of $90-$110
million
In addition, as of March 31, 2020, the Company has:
- Continued to file for and receive CalGEM drilling, abandonment
and workover permits, increasing its available inventory
- Continued to satisfy the Idle Well Management Plan required by
California regulations, with plans and ability to continue to do so
going forward
- Ample liquidity with no near-term debt maturities, reasonable
financial covenant requirements and $382 million available under
its $400 million revolver
“We believe Berry has the balance sheet and operational
flexibility to successfully manage through the current oil price
environment and we have taken immediate and decisive action to
protect our cash flow and liquidity position. We have a
track-record of generating free cash flow and delivering value to
our shareholders, and our long-term business model remains based on
living within Levered Free Cash Flow1 while protecting our base
production and our balance sheet, generating value from capital
investments, and returning capital to our shareholders,” stated
Trem Smith, Berry board chair and chief executive officer.
“Our current near-term plans anticipate a significantly
challenging couple of years, which we are confident Berry will
successfully weather. We have a strong balance sheet; we are
well hedged through 2020 and into 2021; we can scale up and down
quickly with no long-term operational commitments; and, most
importantly, we are committed and able to live within Levered Free
Cash Flow. Our priority is on maximizing our cash position
and maintaining substantial liquidity, which are tremendously
valuable in these times. We will continue to judiciously manage
ours to ensure Berry is strongly positioned to capitalize on the
eventual market improvements. We will continue to seek additional,
sustainable cost savings and efficiency improvements, thus managing
the risk of an extended period of weaker commodity prices, while
maintaining our sharp focus on safety and mechanical
integrity.”
2020 CAPITAL EXPENDITURE BUDGET
The updated capital expenditure guidance for 2020 is now
approximately $65 million, with approximately 65% of the capital
spend weighted toward the first half of 2020. Berry’s focus will be
on the capital needed to sustain annual production levels for the
Company’s California operations. The updated capital budget assumes
contracting one drilling rig no earlier than September 2020,
primarily for sandstone development. Although, the timing and
planning of drilling the targeted 45 to 55 wells is contingent on
multiple factors, including price. Additionally, Berry plans
to spend approximately $15 million on plugging and abandonment
activities to satisfy our obligations under the California mandated
Idle Well Management Plan.
HEDGING UPDATE AND LIQUIDITY
As of March 31, 2020, Berry has 24,000 bbls of oil hedged at
approximately $59.85 Brent through 2020, with an additional 9,500
bbls hedged at approximately $47.19 Brent for 2021.
As of March 31, 2020 |
|
|
|
|
|
|
|
|
|
|
2Q 2020 |
3Q 2020 |
4Q 2020 |
1Q 2021 |
2Q 2021 |
3Q 2021 |
4Q 2021 |
Brent Swap |
BBL |
2,184,000 |
2,208,000 |
2,208,000 |
900,000 |
910,000 |
736,000 |
736,000 |
|
BOPD |
24,000 |
24,000 |
24,000 |
10,000 |
10,000 |
8,000 |
8,000 |
|
Avg Price |
59.91 |
59.85 |
59.85 |
46.97 |
46.97 |
47.47 |
47.47 |
Brent Call |
BBL |
273,000 |
276,000 |
276,000 |
0 |
0 |
0 |
0 |
|
BOPD |
3,000 |
3,000 |
3,000 |
0 |
0 |
0 |
0 |
|
Avg Price |
65.00 |
65.00 |
65.00 |
|
|
|
|
|
|
|
|
|
|
|
|
|
WTI Swap |
BBL |
30,000 |
0 |
0 |
0 |
0 |
0 |
0 |
|
BOPD |
333 |
0 |
0 |
0 |
0 |
0 |
0 |
|
Avg Price |
61.75 |
0 |
0 |
0 |
0 |
0 |
0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
FUEL GAS PURCHASES |
|
|
|
|
|
|
|
|
Kern Delivered Gas Swap |
MMBTU |
5,005,000 |
5,060,000 |
3,840,000 |
3,150,000 |
2,275,000 |
2,300,000 |
775,000 |
|
MMBTU/D |
55,000 |
55,000 |
41,667 |
35,000 |
25,000 |
25,000 |
8,333 |
|
Avg Price |
2.89 |
2.89 |
2.73 |
2.60 |
2.63 |
2.63 |
2.63 |
|
|
|
|
|
|
|
|
|
Socal Citygate Gas Swap |
MMBTU |
455,000 |
460,000 |
155,000 |
0 |
0 |
0 |
0 |
|
MMBTU/D |
5,000 |
5,000 |
1,667 |
0 |
0 |
0 |
0 |
|
Avg Price |
3.80 |
3.80 |
3.80 |
|
|
|
|
Berry faces no near-term debt maturities, as its revolving
credit facility matures in July 2022, and its senior unsecured
notes mature in February 2026. As of March 31, 2020, Berry had
$[382] million of availability under its $400 million revolving
credit facility.
“Looking out to the next two years, our current strategy is one
of continuous focus on increasing our cash position. The recent
adjustment of our 2020 budget and the actions we have taken should
ensure we maintain ample flexibility in 2021. Even in the
current depressed environment, our commitment is to maximizing
shareholder value and we believe there will be future opportunities
to return capital to shareholders, potentially in the form of debt
repurchases or special dividends. However, currently we
believe it is in the best interest of our shareholders that we
suspend the quarterly dividend at this time. We plan to
re-establish it fully when oil strip for Brent returns to $50 per
barrel Brent,” stated Cary Baetz, executive vice president and
chief financial officer. “We will operate efficiently,
safely, and at the lowest possible cost during these challenging
times. While we don’t know when markets will improve, we are
working to ensure that Berry is in the best position for success
when that day comes.”
[1] “Levered Free Cash Flow” is a non-GAAP financial measure
defined as Adjusted EBITDA less capital expenditures, interest
expense and dividends. “Adjusted EBITDA” is also a non-GAAP
financial measure defined 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. Please see our
website, https://ir.bry.com/non-gaap-reconciliations-to-gaap, for
reconciliations of Levered Free Cash Flow and Adjusted EBITDA to
net cash provided by operating activities and of Adjusted EBITDA to
net income (loss), our most directly comparable financial measure
calculated and presented in accordance with GAAP.
ABOUT BERRY CORPORATION (BRY)
Berry 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 bry.com.
FORWARD-LOOKING STATEMENTS
The information in this press release includes forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934. All
statements, other than statements of historical facts, included in
this press release that address plans, activities, events,
objectives, goals, strategies, or developments that the Company
expects, believes or anticipates will or may occur in the future
are forward-looking statements. The forward-looking statements in
this press release are based upon various assumptions, many of
which are based, in turn, upon further assumptions. Although
we believe that these assumptions were reasonable when made, these
assumptions are inherently subject to significant uncertainties and
contingencies which are difficult or impossible to predict and are
beyond our control. Therefore, such statements
forward-looking statements involve significant risks and
uncertainties that could materially affect our expected results of
operations, liquidity, cash flows and business prospects. Without
limiting the generality of the forgoing, such statements
specifically include our expectations, beliefs or projections as to
our future:
- financial position,
- liquidity,
- cash flows,
- anticipated financial and operating results,
- our capital program and development and production plans,
- business strategy,
- potential acquisition opportunities,
- other plans and objectives for operations,
- maintenance capital requirements,
- expected production and costs,
- reserves,
- hedging activities,
- return of capital,
- payment of future dividends,
- future repurchases of stock or debt,
- capital investments and other guidance.
Actual results may differ materially from expectations, and
reported results should not be considered an indication of future
performance. Known factors (but not all the factors) that could
cause actual results to differ materially from those discussed in
the forward-looking statements include:
- volatility of oil, natural gas and natural gas liquids (NGL)
prices;
- our ability to obtain permits on a timely basis, or at
all,
- our ability 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 and electricity;
- changes in laws or regulations or other legal or regulatory
developments;
- 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;
- the timing of planned capital expenditures;
- timely and available drilling and completion equipment and crew
availability and access to necessary resources for drilling,
completing and operating well;
- the length and severity of the recent COVID-19 (coronavirus)
outbreak, including its impacts on oil price, demand, operations
and storage capacity;
- catastrophic events;
- global economic trends, geopolitical risks and general market
and industry conditions, such as those resulting from the
escalation of tensions between Saudi Arabia and Russia and changes
in OPEC’s production levels;
- our ability to make acquisitions and successfully integrate any
acquired businesses; and
- other material risks that appear in the Risk Factors section of
our Annual Report on Form 10-K and other periodic reports filed
with the Securities and Exchange Commission.
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.
Any forward-looking statement speaks only as of the date on
which such statement is made, and we undertake no obligation to
correct or update any forward-looking statement, whether as a
result of new information, future events or otherwise. Investors
are urged to consider carefully the disclosure in our filings with
the Securities and Exchange Commission, available from us at via
our website or via the Investor Relations contact below, or from
the SEC’s website at www.sec.gov.
INVESTOR RELATIONS CONTACT
Berry Corporation (bry)
Todd Crabtree - Manager, Investor Relations
(661) 616-3811
ir@bry.com
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