Berry Corporation (bry) (NASDAQ: BRY) (“Berry” or the “Company”)
today reported net loss of $115 million or $1.45 per diluted share
and Adjusted Net Income(1) of $18 million or $0.23 per diluted
share for the first quarter of 2020.
Current Highlights
- Measures were taken to address the risks caused by the COVID-19
pandemic coupled with OPEC+ dynamics, with a focus on three
priorities: taking care of our employees and communities, ensuring
business continuity, and protecting the Company’s liquidity
- Adjusted EBITDA(1) of $72 million and Unhedged Adjusted
EBITDA(1) of $52 million
- First quarter production of 30,800 Boe/d with oil production
comprising 89%Capital expenditures of $39 million with no changes
to our current guidance
- Enhanced hedge portfolio with nearly 100% of estimated
California oil production hedged in 2020 and additional 2021 hedge
positions, resulting in a current oil hedge book worth
approximately $211 million as of May 1, 2020
- Approximately 515,000 Bbls of total oil storage with an option
for 315,000 Bbls
- Ample liquidity, at quarter end, including $382 million
available under $400 million revolver and currently expecting to
generate $90-$110 million of excess Levered Free Cash Flow(1) by
year end 2020
_______
(1) Please see “Non-GAAP Financial
Measures and Reconciliations” later in this press release for a
reconciliation and more information on these
Non-GAAP measures.
“The Berry team continues to work tirelessly
during this unprecedented and dynamic market environment. We are
proud of our team’s proactive response to both the COVID-19
situation and the events impacting the global oil markets, and
believe that through our decisive actions, our Company and
employees are well positioned to weather this storm and emerge in a
strong competitive position in the future. The health and safety of
our employees and their families is our number one priority. We are
closely monitoring the COVID-19 situation and following the
guidelines from the Federal Government, Centers for Disease Control
and Prevention (CDC), and the state and local governments where we
operate," said Trem Smith, Berry board chair and chief
executive officer.
“The dual impact of COVID-19 related global
demand destruction coupled with a supply surge resulting from the
price war between Saudi Arabia and Russia has had an unprecedented
negative impact on economies around the world and the oil and gas
industry. It has created excess supply across the globe intensified
by dwindling storage capacity driving oil prices to lows not seen
since the 90’s. Although our first quarter results were not
significantly impacted by the convergence of these events, we
anticipate that the consequences of these two issues could affect
our business well into 2021 and therefore have strategically
implemented a plan to help mitigate the impact. We believe Berry
has the balance sheet and operational flexibility to successfully
manage through the current oil price environment and we have taken
actions to protect our cash flow and maintain our strong liquidity
position.
“The seasoned Berry management team has led
organizations and teams through several downturns. We will use our
past experience to navigate Berry through this one. We understand
that, by definition, plans are dynamic and must be modified as
evolution of the data requires. Berry’s key characteristics of
quick decision making, adaptability, flexibility and
resiliency make it especially well-positioned to succeed in this
unique, dynamic world. To that end, we continue to reduce costs and
improve our efficiency providing value in the short, medium, and
long-term. We will maximize our cash position to ensure we have
maximum flexibility regardless of market fluctuations. Managing
cash flow is nothing new for Berry, and as we have historically
demonstrated, we will manage the company to ensure it is strongly
positioned to capitalize on the eventual market improvements.”
First Quarter 2020 Results
Adjusted EBITDA(1), on a hedged basis, was $72
million in the first quarter compared to $87 million in the fourth
quarter 2019. The decrease was largely due to lower unhedged oil
and gas prices, partially offset by higher oil hedge settlements
received and lower costs including OpEx and taxes other than income
taxes. Adjusted EBITDA(1), on an unhedged basis, was $52 million in
the first quarter compared to $72 million in the fourth quarter
2019. Additionally, Adjusted EBITDA(1) in the first quarter 2020
was 5% higher than the same quarter in 2019, although Brent prices
were 20% lower in 2020, demonstrating strong annual growth.
Average daily production decreased 2% for the
first quarter of 2020 compared to the fourth quarter 2019, largely
due to natural decline, partially offset by the impact of Berry's
development program in late December and into the first quarter of
this year. In the first quarter of 2020, a large portion of the
capital spent was used for activities which have no impact on
current production, including for facilities, permitting costs for
future developments and drilling for delineation and injector
wells. The Company's California production of 24.9 MBoe/d for the
first quarter of 2020 decreased 2% from the fourth quarter
2019.
California oil prices before hedges for the
first quarter averaged 95% of Brent, or $48.38/Bbl, which were 20%
lower than the $60.20/Bbl in the fourth quarter 2019, which was 96%
of Brent. The financial hedges for oil sales for the first quarter
2020 added $10.61 per Bbl to the California realized price,
highlighting the effectiveness of our oil hedge positions. Total
Company realized oil prices before hedges of $47.61/Bbl were 20%
lower than the fourth quarter 2019 average of $59.28/Bbl.
On an unhedged basis, operating expenses
decreased by $2.45 per Boe to $18.23 for the first quarter 2020,
compared to $20.68 for the fourth quarter 2019. The decrease was
driven by $2.55 per Boe lower lease operating expenses, largely due
to lower unhedged fuel costs related to our California steam
operations. Additionally, operating expenses, including hedge
effects, decreased to $19.81 per Boe in the first quarter 2020 from
$20.37 in the fourth quarter 2019 due to the same factors and $1.89
per Boe higher gas hedge settlement losses period-over-period.
OpEx consists of lease operating expenses
("LOE"), third-party revenues and expenses from electricity
generation, transportation and marketing activities, as well as the
effect of derivative settlements (received or paid) for gas
purchases, and excludes taxes other than income taxes.
General and administrative expenses were $6.91
per Boe for the first quarter compared to $5.46 per Boe for the
fourth quarter 2019. Adjusted general and administrative
expenses(1) were $5.20 per Boe for the first quarter compared to
$4.66 per Boe for the fourth quarter 2019, primarily due to higher
accrued annual performance incentive costs in 2020 compared to the
fourth quarter 2019 as prior year performance targets were not
fully met.
Taxes, other than income taxes were $1.56 per
Boe for the first quarter compared to $4.16 per Boe in the fourth
quarter 2019, due to lower market rates for greenhouse gas
allowance requirements.
Due to the significant decline in oil prices and in accordance
with accounting rules, Berry recorded a non-cash, pre-tax asset
impairment charge of $289 million on properties in Utah and certain
California locations.
For the first quarter, capital expenditures were
approximately $39 million, on an accrual basis including
capitalized labor but excluding capitalized interest, acquisitions
and asset retirement spending. Approximately 97% of this total was
directed to California oil operations. In the first quarter of 2020
a significant portion of our capital expenditures was used for
activities which have no impact on current production, including
approximately 50% of such costs for facilities, equipping and
permitting for future development. Of the 19 wells drilled in the
first quarter, nine were delineation and two were injector wells,
while eight were producing wells. We also expended approximately $4
million for plugging and abandonment activities. The Company
currently has more than 100 wells permitted for drilling.
Net loss for the first quarter 2020 was $115
million compared to $7 million in the fourth quarter 2019. Adjusted
Net Income(1) was $18 million for the first quarter,
representing a 45% decrease from the fourth quarter 2019.
At March 31, 2020, the Company had $382 million
available for borrowings under its RBL Facility which included $11
million of outstanding borrowings and $7 million of letters of
credit. The RBL Facility had a $500 million borrowing base with an
elected commitment of $400 million.
“These are unprecedented times for our industry.
Therefore, it is critical that we focus our cash position to
provide Berry with the flexibility to endure the bottom of this
cycle. Until we see demand improving and a substantial reduction in
supply, we will manage our business to maximize our cash position
and maintain flexibility. We are continuing to focus on reducing
our costs, improving on our efficiencies and staying in close
communication with our banking relationships We have a solid
balance sheet, with no near-term maturities as our bonds are
maturing out in 2026, our RBL has minimal draws, and we were
over-collateralized in the Fall 2019 borrowing base
redetermination. We are exceedingly focused on weathering this
storm and emerging on the other side by utilizing all of the tools
available to us to achieve that goal,” stated Cary Baetz, chief
financial officer, EVP and director.
Earnings Conference Call
The Company will host a conference call May 7, 2020 to
discuss these results:
Live Call Date: |
Thursday, May 7, 2020 |
Live Call Time: |
9:00 a.m. Eastern Time (6 a.m. Pacific Time) |
Live Call Dial-in: |
877-491-5169 from the U.S. |
|
720-405-2254 from international locations |
Live Call Passcode: |
2465259 |
|
|
A replay of the audio webcast will also be archived on the
“Events” section of Berry’s
website at bry.com/category/events.An audio replay will
be available shortly after the broadcast:
Replay Dates: |
Through Thursday, May 21, 2020 |
Replay Dial-in: |
855-859-2056 from the U.S. |
|
404-537-3406 from international locations |
Replay Passcode: |
2465259 |
|
|
A replay of the audio webcast will also be
archived on the “Events” section of Berry’s
website at bry.com/category/events. In addition, an
investor presentation will be available on the Company’s
website.
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; and
- 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:
- the length, scope and severity of the recent COVID-19 pandemic,
including the effects of related public health concerns and the
impact of actions taken by governmental authorities and other third
parties in response to the pandemic and its impact on commodity
prices, supply and demand considerations, and storage
capacity;
- global economic trends, geopolitical risks and general economic
and industry conditions, such as those resulting from the COVID-19
pandemic and from the actions of OPEC+, including the escalation of
tensions between Saudi Arabia and Russia and changes in OPEC+'s
production levels;
- volatility of oil, natural gas and NGL prices, including the
sharp decline in crude oil prices that occurred in the first
quarter and has continued into the second quarter of 2020;
- supply of and demand for oil, natural gas and NGLs;
- disruptions to, capacity constraints in, or other limitations
on the pipeline systems that deliver our oil and natural gas and
other processing and transportation considerations;
- inability to generate sufficient cash flow from operations or
to obtain adequate financing to fund capital expenditures,
meet our working capital requirements or fund planned
investments;
- price fluctuations and availability of natural gas and
electricity and the cost of steam;
- our ability to use derivative instruments to manage commodity
price risk;
- the regulatory environment, including availability or timing
of, and conditions imposed on, obtaining and/or maintaining permits
and approvals, including those necessary for drilling and/or
development projects;
- our ability to meet our planned drilling schedule, including
due to our ability to obtain permits on a timely basis or at all,
and to successfully drill wells that produce oil and natural gas in
commercially viable quantities;
- the impact of current, pending and/or future laws and
regulations, and of legislative and regulatory changes and other
government activities, including those related to drilling,
completion, well stimulation, operation, maintenance or abandonment
of wells or facilities, managing energy, water, land, greenhouse
gases or other emissions, protection of health, safety and the
environment, or transportation, marketing and sale of our
products;
- the California and global energy future, including the factors
and trends that are expected to shape it, such as concerns about
climate change and other air quality issues, the transition to a
low-emission economy and the expected role of different energy
sources;
- uncertainties associated with estimating proved reserves and
related future cash flows;
- our ability to replace our reserves through exploration and
development activities;
- drilling and production results, including lower-than-expected
production, reserves or resources from development projects or
higher-than-expected decline rates;
- our ability to obtain timely and available drilling and
completion equipment and crew availability and access to necessary
resources for drilling, completing and operating wells;
- changes in tax laws;
- effects of competition;
- uncertainties and liabilities associated with acquired and
divested assets;
- our ability to make acquisitions and successfully integrate any
acquired businesses;
- large or multiple customer defaults on contractual obligations,
including defaults resulting from actual or potential
insolvencies;
- geographical concentration of our operations;
- the creditworthiness and performance of our counterparties with
respect to our hedges;
- impact of derivatives legislation affecting our ability to
hedge;
- failure of risk management and ineffectiveness of internal
controls;
- catastrophic events, including wildfires, earthquakes and
pandemics;
- environmental risks and liabilities under federal, state,
tribal and local laws and regulations (including remedial
actions);
- potential liability resulting from pending or future
litigation;
- our ability to recruit and/or retain key members of our senior
management and key technical employees;
- information technology failures or cyber attacks; and other
material risks that appear in the Risk Factors section of our most
recent Quarterly Report on Form 10-Q, 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
except as required by applicable law. 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.
Contact
Contact: Berry CorporationTodd Crabtree - Manager, Investor
Relations(661) 616-3811 ir@bry.com
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 |
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
|
|
|
|
|
|
|
($ and shares in thousands, except per share amounts) |
Statement of
Operations Data: |
|
|
|
|
|
Revenues and
other: |
|
|
|
|
|
Oil, natural gas and natural gas liquids sales |
$ |
122,098 |
|
|
$ |
156,336 |
|
|
$ |
131,102 |
|
Electricity sales |
5,461 |
|
|
6,844 |
|
|
9,729 |
|
Gains (losses) on oil derivatives |
211,229 |
|
|
(45,544 |
) |
|
(65,239 |
) |
Marketing revenues |
453 |
|
|
437 |
|
|
830 |
|
Other revenues |
24 |
|
|
55 |
|
|
117 |
|
Total revenues and other |
339,265 |
|
|
118,128 |
|
|
76,539 |
|
|
|
|
|
|
|
Expenses and
other: |
|
|
|
|
|
Lease operating expenses |
50,752 |
|
|
59,529 |
|
|
57,928 |
|
Electricity generation expenses |
3,946 |
|
|
4,785 |
|
|
7,760 |
|
Transportation expenses |
1,822 |
|
|
2,124 |
|
|
2,173 |
|
Marketing expenses |
430 |
|
|
403 |
|
|
851 |
|
General and administrative expenses |
19,337 |
|
|
15,710 |
|
|
14,340 |
|
Depreciation, depletion and amortization |
35,329 |
|
|
30,102 |
|
|
24,585 |
|
Impairment of oil and gas properties |
289,085 |
|
|
51,081 |
|
|
— |
|
Taxes, other than income taxes |
4,352 |
|
|
11,962 |
|
|
8,086 |
|
Losses (gains) on natural gas derivatives |
12,035 |
|
|
(3,385 |
) |
|
(2,115 |
) |
Other operating expenses |
2,202 |
|
|
774 |
|
|
1,245 |
|
Total expenses and other |
419,290 |
|
|
173,085 |
|
|
114,853 |
|
|
|
|
|
|
|
Other (expenses)
income: |
|
|
|
|
|
Interest expense |
(8,920 |
) |
|
(7,871 |
) |
|
(8,805 |
) |
Other, net |
(6 |
) |
|
— |
|
|
154 |
|
Total other (expenses) income |
(8,926 |
) |
|
(7,871 |
) |
|
(8,651 |
) |
Reorganization items, net |
— |
|
|
— |
|
|
(231 |
) |
Loss before income
taxes |
(88,951 |
) |
|
(62,828 |
) |
|
(47,196 |
) |
Income tax expense
(benefit) |
26,349 |
|
|
(55,844 |
) |
|
(13,098 |
) |
Net loss |
$ |
(115,300 |
) |
|
$ |
(6,984 |
) |
|
$ |
(34,098 |
) |
|
|
|
|
|
|
Net (loss) income per
share: |
|
|
|
|
|
Basic |
$ |
(1.45 |
) |
|
$ |
0.09 |
|
|
$ |
(0.42 |
) |
Diluted |
$ |
(1.45 |
) |
|
$ |
0.09 |
|
|
$ |
(0.42 |
) |
|
|
|
|
|
|
Weighted-average common shares
outstanding - basic |
79,608 |
|
|
80,435 |
|
|
81,765 |
|
Weighted-average common shares
outstanding - diluted |
79,608 |
|
|
80,435 |
|
|
81,765 |
|
|
|
|
|
|
|
Adjusted Net Income(1) |
$ |
18,175 |
|
|
$ |
33,189 |
|
|
$ |
24,264 |
|
Weighted-average common shares
outstanding - diluted |
79,945 |
|
|
80,788 |
|
|
81,973 |
|
Diluted earnings per share on
Adjusted Net Income |
$ |
0.23 |
|
|
$ |
0.41 |
|
|
$ |
0.30 |
|
|
|
|
|
|
|
|
Three Months Ended |
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
|
|
|
|
|
|
|
($ and shares in thousands, except per share amounts) |
Adjusted EBITDA(1) |
$ |
71,800 |
|
|
$ |
86,995 |
|
|
$ |
68,502 |
|
Adjusted EBITDA
unhedged(1) |
$ |
52,175 |
|
|
$ |
71,529 |
|
|
$ |
53,598 |
|
Levered Free Cash Flow(1) |
$ |
13,901 |
|
|
$ |
27,695 |
|
|
$ |
526 |
|
Levered Free Cash Flow
unhedged(1) |
$ |
(5,724 |
) |
|
$ |
12,229 |
|
|
$ |
(14,378 |
) |
Adjusted General and
Administrative expenses(1) |
$ |
14,556 |
|
|
$ |
13,421 |
|
|
$ |
11,587 |
|
Effective Tax Rate |
(30 |
)% |
|
89 |
% |
|
28 |
% |
Cash Flow
Data: |
|
|
|
|
|
Net cash provided by operating
activities |
$ |
44,483 |
|
|
$ |
86,036 |
|
|
$ |
21,097 |
|
Net cash used in investing
activities |
$ |
(43,038 |
) |
|
$ |
(57,361 |
) |
|
$ |
(52,791 |
) |
Net cash used in financing
activities |
$ |
(1,444 |
) |
|
$ |
(28,675 |
) |
|
$ |
(35,324 |
) |
__________
(1) See further discussion and
reconciliation in “Non-GAAP Financial Measures and
Reconciliations”.
|
March 31, 2020 |
|
December 31, 2019 |
|
|
|
|
|
($ and shares in thousands) |
Balance Sheet
Data: |
|
|
|
Total current assets |
$ |
238,192 |
|
|
$ |
100,432 |
|
Total property, plant and
equipment, net |
$ |
1,295,613 |
|
|
$ |
1,576,267 |
|
Total current liabilities |
$ |
108,720 |
|
|
$ |
156,628 |
|
Long-term debt |
$ |
403,663 |
|
|
$ |
394,319 |
|
Total equity |
$ |
849,826 |
|
|
$ |
972,448 |
|
Outstanding common stock
shares as of |
79,751 |
|
|
79,543 |
|
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) |
|
Three Months Ended |
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
($ in thousands, except prices) |
|
|
|
|
|
Oil, natural gas and natural gas liquids sales |
$ |
109,519 |
|
|
$ |
140,972 |
|
|
$ |
111,896 |
|
Operating (loss)
income(1) |
$ |
(113,203 |
) |
|
$ |
66,977 |
|
|
$ |
48,572 |
|
Depreciation, depletion, and
amortization (DD&A) |
$ |
30,918 |
|
|
$ |
26,950 |
|
|
$ |
21,342 |
|
Impairment of oil and gas
properties |
$ |
163,879 |
|
|
$ |
— |
|
|
$ |
— |
|
Average daily production
(MBoe/d) |
24.9 |
|
|
25.5 |
|
|
21.0 |
|
Production (oil % of
total) |
100 |
% |
|
100 |
% |
|
100 |
% |
Realized sales prices: |
|
|
|
|
|
Oil (per Bbl) |
$ |
48.38 |
|
|
$ |
60.20 |
|
|
$ |
59.16 |
|
NGLs (per Bbl) |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Gas (per Mcf) |
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Capital expenditures(2) |
$ |
38,072 |
|
|
$ |
34,983 |
|
|
$ |
42,509 |
|
|
Utah (Uinta basin) |
|
Colorado (Piceance basin) |
|
Three Months Ended |
|
Three Months Ended |
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
($ in thousands, except prices) |
|
|
|
|
|
|
|
|
|
|
|
Oil,
natural gas and natural gas liquids sales |
$ |
11,278 |
|
|
$ |
13,618 |
|
|
$ |
16,666 |
|
|
$ |
1,299 |
|
|
$ |
1,746 |
|
|
$ |
2,540 |
|
Operating (loss)
income(1) |
$ |
(127,700 |
) |
|
$ |
784 |
|
|
$ |
4,268 |
|
|
$ |
384 |
|
|
$ |
(51,356 |
) |
|
$ |
593 |
|
Depreciation, depletion, and
amortization (DD&A) |
$ |
4,311 |
|
|
$ |
2,846 |
|
|
$ |
2,930 |
|
|
$ |
55 |
|
|
$ |
262 |
|
|
$ |
314 |
|
Impairment of oil and gas
properties |
$ |
125,206 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
51,081 |
|
|
$ |
— |
|
Average daily production
(MBoe/d) |
4.5 |
|
|
4.4 |
|
|
5.2 |
|
|
1.4 |
|
|
1.4 |
|
|
1.6 |
|
Production (oil % of
total) |
53 |
% |
|
51 |
% |
|
59 |
% |
|
1 |
% |
|
1 |
% |
|
1 |
% |
Realized sales prices: |
|
|
|
|
|
|
|
|
|
|
|
Oil (per Bbl) |
$ |
39.64 |
|
|
$ |
49.01 |
|
|
$ |
41.37 |
|
|
$ |
42.54 |
|
|
$ |
51.87 |
|
|
$ |
43.40 |
|
NGLs (per Bbl) |
$ |
13.16 |
|
|
$ |
14.60 |
|
|
$ |
24.56 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Gas (per Mcf) |
$ |
2.22 |
|
|
$ |
2.89 |
|
|
$ |
4.59 |
|
|
$ |
1.70 |
|
|
$ |
2.23 |
|
|
$ |
2.84 |
|
Capital expenditures(2) |
$ |
857 |
|
|
$ |
4,282 |
|
|
$ |
5,273 |
|
|
$ |
6 |
|
|
$ |
295 |
|
|
$ |
40 |
|
__________
(1) Operating (loss) income includes oil,
natural gas and NGL sales, marketing revenues, other revenues, and
scheduled oil derivative settlements, offset by operating expenses,
general and administrative expenses, DD&A, impairment of oil
and gas properties, and taxes, other than income taxes.
(2) Excludes corporate capital
expenditures.
COMMODITY PRICING
|
Three Months Ended |
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
Realized Sales Prices
(weighted-average) |
|
|
|
|
|
Oil without hedge ($/Bbl) |
$ |
47.61 |
|
|
$ |
59.28 |
|
|
$ |
56.88 |
|
Effects of scheduled
derivative settlements ($/Bbl) |
$ |
9.67 |
|
|
$ |
5.70 |
|
|
$ |
5.15 |
|
Oil with hedge ($/Bbl) |
$ |
57.28 |
|
|
$ |
64.98 |
|
|
$ |
62.03 |
|
Natural gas ($/Mcf) |
$ |
2.00 |
|
|
$ |
2.60 |
|
|
$ |
3.83 |
|
NGLs ($/Bbl) |
$ |
13.16 |
|
|
$ |
14.60 |
|
|
$ |
24.35 |
|
|
|
|
|
|
|
Index
Prices |
|
|
|
|
|
Brent oil ($/Bbl) |
$ |
50.82 |
|
|
$ |
62.42 |
|
|
$ |
63.83 |
|
WTI oil ($/Bbl) |
$ |
46.35 |
|
|
$ |
57.02 |
|
|
$ |
54.87 |
|
Kern, Delivered natural gas
($/MMBtu)(1) |
$ |
1.97 |
|
|
$ |
2.99 |
|
|
$ |
5.03 |
|
Henry Hub natural gas
($/MMBtu) |
$ |
1.91 |
|
|
$ |
2.40 |
|
|
$ |
2.92 |
|
__________
(1) Kern, Delivered Index is the
relevant index used for gas purchases in California.
CURRENT HEDGING SUMMARY
As of March 31, 2020, we had the following crude oil
production and gas purchases hedges.
|
Q2 2020 |
|
Q3 2020 |
|
Q4 2020 |
|
FY 2021 |
|
|
|
|
|
|
|
|
Fixed Price Oil Swaps
(Brent): |
|
|
|
|
|
|
|
Hedged volume (MBbls) |
2,184 |
|
|
2,208 |
|
|
2,208 |
|
|
3,282 |
|
Weighted-average price ($/Bbl) |
$ |
59.91 |
|
|
$ |
59.85 |
|
|
$ |
59.85 |
|
|
$ |
47.19 |
|
Fixed Price Oil Swaps
(WTI): |
|
|
|
|
|
|
|
Hedged volume (MBbls) |
30 |
|
|
— |
|
|
— |
|
|
— |
|
Weighted-average price ($/Bbl) |
$ |
61.75 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
Purchased Oil Calls
Options (Brent): |
|
|
|
|
|
|
|
Hedged volume (MBbls) |
273 |
|
|
276 |
|
|
276 |
|
|
— |
|
Weighted-average price ($/Bbl) |
$ |
65.00 |
|
|
$ |
65.00 |
|
|
$ |
65.00 |
|
|
$ |
— |
|
Fixed Price Gas
Purchase Swaps (Kern, Delivered): |
|
|
|
|
|
|
|
Hedged volume (MMBtu) |
5,005,000 |
|
|
5,060,000 |
|
|
3,840,000 |
|
|
8,500,000 |
|
Weighted-average price ($/MMBtu) |
$ |
2.89 |
|
|
$ |
2.89 |
|
|
$ |
2.73 |
|
|
$ |
2.62 |
|
Fixed Price Gas
Purchase Swaps (SoCal Citygate): |
|
|
|
|
|
|
|
Hedged volume (MMBtu) |
455,000 |
|
|
460,000 |
|
|
155,000 |
|
|
— |
|
Weighted-average price ($/MMBtu) |
$ |
3.80 |
|
|
$ |
3.80 |
|
|
$ |
3.80 |
|
|
$ |
— |
|
In April 2020, we added fixed price gas purchase
swaps (Kern, Delivered) of 10,000 MMbtu/d at $2.79 beginning
November 2020 through October 2021.
OPERATING EXPENSES
|
Three Months Ended |
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
|
|
|
|
|
|
|
($ in thousands except per Boe amounts) |
Lease operating expenses |
$ |
50,752 |
|
|
$ |
59,529 |
|
|
$ |
57,928 |
|
Electricity generation
expenses |
3,946 |
|
|
4,785 |
|
|
7,760 |
|
Electricity sales(1) |
(5,461 |
) |
|
(6,844 |
) |
|
(9,729 |
) |
Transportation expenses |
1,822 |
|
|
2,124 |
|
|
2,173 |
|
Transportation sales(1) |
(24 |
) |
|
(55 |
) |
|
(117 |
) |
Marketing expenses |
430 |
|
|
403 |
|
|
851 |
|
Marketing revenues(1) |
(453 |
) |
|
(437 |
) |
|
(830 |
) |
Derivative settlements paid
(received) for gas purchases(1) |
4,411 |
|
|
(906 |
) |
|
(3,724 |
) |
Total operating expenses(1) |
$ |
55,423 |
|
|
$ |
58,599 |
|
|
$ |
54,312 |
|
|
|
|
|
|
|
Lease operating expenses
($/Boe) |
$ |
18.14 |
|
|
$ |
20.69 |
|
|
$ |
23.16 |
|
Electricity generation
expenses ($/Boe) |
1.41 |
|
|
1.66 |
|
|
3.10 |
|
Electricity sales ($/Boe) |
(1.95 |
) |
|
(2.38 |
) |
|
(3.89 |
) |
Transportation expenses
($/Boe) |
0.65 |
|
|
0.74 |
|
|
0.87 |
|
Transportation sales
($/Boe) |
(0.01 |
) |
|
(0.02 |
) |
|
(0.05 |
) |
Marketing expenses
($/Boe) |
0.15 |
|
|
0.14 |
|
|
0.34 |
|
Marketing revenues
($/Boe) |
(0.16 |
) |
|
(0.15 |
) |
|
(0.33 |
) |
Derivative settlements paid
(received) for gas purchases ($/Boe) |
1.58 |
|
|
(0.31 |
) |
|
(1.49 |
) |
Total operating expenses ($/Boe) |
$ |
19.81 |
|
|
$ |
20.37 |
|
|
$ |
21.71 |
|
Total unhedged operating expenses ($/Boe)(2) |
$ |
18.23 |
|
|
$ |
20.68 |
|
|
$ |
23.20 |
|
|
|
|
|
|
|
Total MBoe |
2,798 |
|
|
2,877 |
|
|
2,501 |
|
__________
(1) 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
revenues and 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
relate to water and other liquids that we transport on our systems
on behalf of third parties and have not been significant to date.
Operating expenses also include the effect of derivative
settlements (received or paid) for gas purchases.
(2) Total unhedged operating
expenses equals total operating expenses, excluding the derivative
settlements paid (received) for gas purchases.
PRODUCTION STATISTICS
|
Three Months Ended |
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
Net Oil, Natural Gas
and NGLs Production Per
Day(1): |
|
|
|
|
|
Oil
(MBbl/d) |
|
|
|
|
|
California |
24.9 |
|
|
25.5 |
|
|
21.0 |
|
Utah |
2.4 |
|
|
2.2 |
|
|
3.1 |
|
Colorado |
— |
|
|
— |
|
|
— |
|
Total oil |
27.3 |
|
|
27.7 |
|
|
24.1 |
|
Natural gas
(MMcf/d) |
|
|
|
|
|
|
|
California |
— |
|
|
— |
|
|
— |
|
Utah |
10.5 |
|
|
10.7 |
|
|
10.4 |
|
Colorado |
8.0 |
|
|
8.2 |
|
|
9.1 |
|
Total natural gas |
18.5 |
|
|
18.9 |
|
|
19.5 |
|
NGLs
(MBbl/d) |
|
|
|
|
|
|
|
|
California |
— |
|
|
— |
|
|
— |
|
Utah |
0.4 |
|
|
0.4 |
|
|
0.4 |
|
Colorado |
— |
|
|
— |
|
|
— |
|
Total NGLs |
0.4 |
|
|
0.4 |
|
|
0.4 |
|
Total Production
(MBoe/d)(2) |
30.8 |
|
|
31.3 |
|
|
27.8 |
|
__________
(1) Production represents volumes
sold during the period.
(2) 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 March 31,
2020, the average prices of Brent oil and Henry Hub natural gas
were $50.82 per Bbl and $1.91 per MMBtu respectively, resulting in
an oil-to-gas ratio of approximately 4 to 1 on an energy equivalent
basis.
CAPITAL EXPENDITURES (ACCRUAL BASIS)
|
Three Months Ended |
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
|
|
|
|
|
|
|
(in thousands) |
Capital expenditures (accrual
basis) |
$ |
39,415 |
|
|
$ |
41,877 |
|
|
$ |
49,099 |
|
NON-GAAP FINANCIAL MEASURES AND
RECONCILIATIONS
Adjusted Net Income (Loss) is not a measure of
net income (loss), Levered Free Cash Flow is not a measure of cash
flow, and Adjusted EBITDA is not a measure of either, 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 to
sustain production levels and for 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 and external users of our financial statements, such as
industry analysts, investors, lenders and rating agencies. 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 |
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
|
|
|
|
|
|
|
($ thousands, except per share amounts) |
Net loss |
$ |
(115,300 |
) |
|
$ |
(6,984 |
) |
|
$ |
(34,098 |
) |
Add (Subtract): discrete income tax items |
46,700 |
|
|
(38,653 |
) |
|
— |
|
Add (Subtract): |
|
|
|
|
|
(Gains) losses on oil and natural gas derivatives |
(199,194 |
) |
|
42,159 |
|
|
63,124 |
|
Net cash received for scheduled derivative settlements |
19,625 |
|
|
15,466 |
|
|
14,904 |
|
Other operating expenses |
2,202 |
|
|
774 |
|
|
1,245 |
|
Impairment of oil and gas properties |
289,085 |
|
|
51,081 |
|
|
— |
|
Non-recurring costs |
1,862 |
|
|
— |
|
|
1,329 |
|
Reorganization items, net |
— |
|
|
— |
|
|
231 |
|
Total additions, net |
113,580 |
|
|
109,480 |
|
|
80,833 |
|
|
|
|
|
|
|
Income tax expense of
adjustments at effective tax rate(1) |
(26,805 |
) |
|
(30,654 |
) |
|
(22,471 |
) |
Adjusted Net Income
(Loss) |
$ |
18,175 |
|
|
$ |
33,189 |
|
|
$ |
24,264 |
|
|
|
|
|
|
|
Basic EPS on Adjusted Net
Income |
$ |
0.23 |
|
|
$ |
0.41 |
|
|
$ |
0.30 |
|
Diluted EPS on Adjusted Net
Income |
$ |
0.23 |
|
|
$ |
0.41 |
|
|
$ |
0.30 |
|
|
|
|
|
|
|
Weighted average shares of
common stock outstanding - basic |
79,608 |
|
|
80,435 |
|
|
81,765 |
|
Weighted average shares of
common stock outstanding - diluted |
79,945 |
|
|
80,788 |
|
|
81,973 |
|
__________(1) Excludes prior year
income tax credits from the total additions, net line item and the
tax effect the prior tax credits have on the current year effective
tax rate.
ADJUSTED EBITDA AND ADJUSTED EBITDA
UNHEDGED
The following tables present a reconciliation of
the GAAP financial measures of net income (loss) and net cash
provided or used by operating activities to the non-GAAP financial
measures of Adjusted EBITDA and Adjusted EBITDA Unhedged.
|
Three Months Ended |
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
|
|
|
|
|
|
|
($ thousands) |
Net loss |
$ |
(115,300 |
) |
|
$ |
(6,984 |
) |
|
$ |
(34,098 |
) |
Add (Subtract): |
|
|
|
|
|
Interest expense |
8,920 |
|
|
7,871 |
|
|
8,805 |
|
Income tax expense (benefit) |
26,349 |
|
|
(55,845 |
) |
|
(13,098 |
) |
Depreciation, depletion and amortization |
35,329 |
|
|
30,102 |
|
|
24,585 |
|
Impairment of oil and gas properties |
289,085 |
|
|
51,081 |
|
|
— |
|
Derivative (gain) loss |
(199,194 |
) |
|
42,160 |
|
|
63,124 |
|
Net cash received (paid) for scheduled derivative settlements |
19,625 |
|
|
15,466 |
|
|
14,904 |
|
Other operating expense |
2,202 |
|
|
774 |
|
|
1,245 |
|
Stock compensation expense |
2,922 |
|
|
2,370 |
|
|
1,475 |
|
Non-recurring costs |
1,862 |
|
|
— |
|
|
1,329 |
|
Reorganization items, net |
— |
|
|
— |
|
|
231 |
|
Adjusted EBITDA |
$ |
71,800 |
|
|
$ |
86,995 |
|
|
$ |
68,502 |
|
Net cash (received) paid for
scheduled derivative settlements |
(19,625 |
) |
|
(15,466 |
) |
|
(14,904 |
) |
Adjusted EBITDA unhedged |
$ |
52,175 |
|
|
$ |
71,529 |
|
|
$ |
53,598 |
|
|
|
|
|
|
|
Net cash provided by operating
activities |
$ |
44,483 |
|
|
$ |
86,036 |
|
|
$ |
21,097 |
|
Add (Subtract): |
|
|
|
|
|
Cash interest payments |
14,879 |
|
|
584 |
|
|
14,000 |
|
Cash income tax payments (refunds) |
2 |
|
|
(3 |
) |
|
— |
|
Non-recurring costs |
1,862 |
|
|
— |
|
|
1,329 |
|
Other changes in operating assets and liabilities |
10,574 |
|
|
378 |
|
|
32,076 |
|
Adjusted EBITDA |
$ |
71,800 |
|
|
$ |
86,995 |
|
|
$ |
68,502 |
|
Net cash (received) paid for
scheduled derivative settlements |
(19,625 |
) |
|
(15,466 |
) |
|
(14,904 |
) |
Adjusted EBITDA unhedged |
$ |
52,175 |
|
|
$ |
71,529 |
|
|
$ |
53,598 |
|
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 |
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
|
|
|
|
|
|
|
($ thousands) |
Adjusted EBITDA |
$ |
71,800 |
|
|
$ |
86,995 |
|
|
$ |
68,502 |
|
Subtract: |
|
|
|
|
|
Capital expenditures - accrual basis |
(39,415 |
) |
|
(41,877 |
) |
|
(49,099 |
) |
Interest expense |
(8,920 |
) |
|
(7,871 |
) |
|
(8,805 |
) |
Cash dividends declared |
(9,564 |
) |
|
(9,552 |
) |
|
(10,072 |
) |
Levered free cash flow |
$ |
13,901 |
|
|
$ |
27,695 |
|
|
$ |
526 |
|
Net cash (received) paid for
scheduled derivative settlements |
(19,625 |
) |
|
(15,466 |
) |
|
(14,904 |
) |
Levered free cash flow
unhedged |
$ |
(5,724 |
) |
|
$ |
12,229 |
|
|
$ |
(14,378 |
) |
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 |
|
March 31, 2020 |
|
December 31, 2019 |
|
March 31, 2019 |
|
|
|
|
|
|
|
($ in thousands except per MBoe amounts) |
General and administrative expenses |
$ |
19,337 |
|
|
$ |
15,710 |
|
|
$ |
14,340 |
|
Subtract: |
|
|
|
|
|
Non-recurring costs |
(1,862 |
) |
|
— |
|
|
(1,329 |
) |
Non-cash stock compensation expense (G&A portion) |
(2,919 |
) |
|
(2,289 |
) |
|
(1,424 |
) |
Adjusted general and
administrative expenses |
$ |
14,556 |
|
|
$ |
13,421 |
|
|
$ |
11,587 |
|
|
|
|
|
|
|
General and administrative
expenses ($/MBoe) |
$ |
6.91 |
|
|
$ |
5.46 |
|
|
$ |
5.73 |
|
Subtract: |
|
|
|
|
|
Non-recurring costs ($/MBoe) |
(0.67 |
) |
|
— |
|
|
(0.53 |
) |
Non-cash stock compensation expense ($/MBoe) |
(1.04 |
) |
|
(0.80 |
) |
|
(0.57 |
) |
Adjusted general and
administrative expenses ($/MBoe) |
$ |
5.20 |
|
|
$ |
4.66 |
|
|
$ |
4.63 |
|
|
|
|
|
|
|
Total MBoe |
2,798 |
|
|
2,877 |
|
|
2,501 |
|
Berry (NASDAQ:BRY)
Historical Stock Chart
From Jun 2024 to Jul 2024
Berry (NASDAQ:BRY)
Historical Stock Chart
From Jul 2023 to Jul 2024