UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
Washington, D.C.
20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of
Report (Date of earliest event reported): August 4, 2009
BERRY PETROLEUM
COMPANY
(Exact
Name of Registrant as Specified in its Charter)
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DELAWARE
(State
or Other Jurisdiction of
Incorporation
or Organization)
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1-9735
(Commission
File Number)
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77-0079387
(IRS
Employer
Identification
Number)
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1999 BROADWAY, SUITE 3700,
DENVER, COLORADO
(Address
of Principal Executive Offices)
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80202
(Zip
Code)
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Registrant’s
telephone number, including area code: (303) 999-4400
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
- 1
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Item
2.02 Results of Operations and Financial Condition
On August
4, 2009, Berry Petroleum Company issued a news release announcing its financial
and operational results for the second quarter ended June 30, 2009.
These results are discussed in the news release attached hereto as Exhibit 99.1,
which is incorporated by reference in its entirety.
Item 9.01
Financial
Statements and Exhibits
(d)
Exhibits
99.1 -
News Release by Berry Petroleum Company dated August 4, 2009, titled "Berry
Petroleum Announces Results for Second Quarter of 2009; Lowers Operating
Costs and Adds Bolt-on Acquisitions" announcing the Registrant's
results for the second quarter ended June 30, 2009.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned hereto
duly authorized.
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BERRY PETROLEUM
COMPANY
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By:
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/s/ Kenneth A.
Olson
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Kenneth
A. Olson
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Corporate
Secretary
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Date: August
4, 2009
- 2
- -
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Berry Petroleum Company News
Berry
Petroleum Company
1999 Broadway, Suite
3700
Denver, CO
80202
303-999-4400
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Contacts:
David Wolf 303-999-4400 Todd Crabtree
866-472-8279
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Berry
Petroleum Announces Results for Second Quarter of 2009
Lowers
Operating Costs and Adds Bolt-on Acquisitions
Denver -- (BUSINESS WIRE) – August 4,
2009 -- Berry
Petroleum Company (NYSE:BRY) reported a second quarter
loss of ($13.0 million), or ($0.28) per diluted share, for the three months
ended June 30, 2009, compared to net income of $49.1 million, or $1.07 per
diluted share in the second quarter of 2008, according to Robert F. Heinemann,
president and chief executive officer. Discretionary cash flow for the second
quarter totaled $55 million. (Discretionary cash flow is a non-GAAP measure; see
reconciliation below.)
Items
that affect the net loss for the quarter include a non-cash loss on hedges, the
write-off of certain costs related to the Company’s credit facility and second
lien term loan, the liability for a regulatory compliance matter, post closing
adjustments on our DJ asset sale, and inventoried volumes from Poso Creek that
will be sold in the second half of 2009. In total, for the second quarter of
2009, these items decreased net income by approximately $30.4 million, or $0.66
per diluted share for an adjusted second quarter net income of $17.4 million, or
$0.38 per diluted share.
For the
second quarters of 2009 and 2008, net production in BOE per day was as
follows:
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Second
Quarter Ended June 30
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2009
Production
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2008
Production
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Oil
(Bbls)
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19,907 | 68 | % | 20,611 | 71 | % | ||||||||||
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Natural
Gas (BOE)
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9,363 | 32 | % | 8,389 | 29 | % | ||||||||||
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Total
BOE per day
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29,270 | 100 | % | 29,000 | 100 | % | ||||||||||
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DJ
Basin Production (BOE/D)
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- | 3,269 | ||||||||||||||
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Production
– Continuing Operations (BOE/D)
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29,270 | 25,731 | ||||||||||||||
Mr.
Heinemann said, “We deployed resources during the second quarter to improve our
balance sheet and position the company to take advantage of opportunities in the
current commodity price environment. We issued $325 million of 10¼ % notes due
2014, and our liquidity today is over $400 million. We expect to
further improve our liquidity by approximately $60 million by the end of 2009
from excess cash flow.
During
the quarter we invested $10 million in three acquisitions. We acquired the
McKittrick 21Z property in California which has approximately 50 million barrels
of oil in place and a pilot steam flood is planned for this property in late
2009. This acquisition combined with our development of the diatomite
and Ethel D brings our total oil under development in California to the 500
million barrel range.” The company also made two opportunistic
natural gas acquisitions during the quarter. Additional deep rights
on the E. Texas Darco property were acquired adding 13 additional Haynesville
horizontal locations and the company increased its interest in its
Piceance basin Garden Gulch property. These bolt-on acquisitions
provide additional development opportunities near existing operations utilizing
existing technical and operational resources.
1
Berry
Petroleum Company - Second Quarter Ended June 30, 2009
Results
Three
Months Results
Sales
from oil and gas were $119 million in the second quarter of 2009 compared to
$169 million in the same 2008 period due primarily to lower oil and natural gas
prices. For the same period, operating costs were lower by $9.32 per BOE due to
lower natural gas prices which reduces the cost of steam in California and the
continued results of company-wide cost reduction initiatives. General
and administrative costs were higher than the second quarter of 2008 primarily
due to a liability accrued for a penalty in a regulatory
matter. While the initial proposed penalty for this matter was
substantial, the company believes its ultimate liability will not exceed $2.1
million.
Operational
Update
Michael
Duginski, executive vice president and chief operating officer stated, “We
continue to focus on delivering cost reductions in all of our producing areas.
Operating costs were lower in the second quarter of 2009 by 42% compared to the
second quarter of 2008 due to the combination of our cost reduction efforts and
lower natural gas prices. Our 2009 capital program is proceeding as
planned and results are in line with our expectations. N. Midway diatomite
production averaged 2,930 BOE/D in the second quarter, up 72% from the
comparable 2008 quarter, and is expected to average 3,000 BOE/D for 2009. We
plan to drill two remaining vertical wells in East Texas and then drill our
first horizontal Haynesville well in the Darco field in the second half of
2009.”
Costs
Per BOE and Updated 2009 Guidance
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Anticipated
range
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Full-year
2009 per BOE
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3
mo. ended 06/30/09
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3
mo. ended 06/30/08
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Operating
costs-oil and gas production
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$
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13.00
- 15.00
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$
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13.03
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$
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22.35
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Production
taxes
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1.50
- 2.50
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1.83
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2.80
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DD&A
– oil and gas production (1)
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13.00
- 14.00
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12.89
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11.06
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G&A
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4.25
- 4.75
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4.94
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4.67
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Interest
expense
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4.00
- 4.75
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3.97
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1.52
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Total
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$
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35.75
- 41.00
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$
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36.66
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$
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42.40
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(1)
Full-year estimate includes both oil & gas and electricity
Explanation
and Reconciliation of Non-GAAP Financial Measures
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Three Months
Ended
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Six Months Ended
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06/30/09
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06/30/08
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06/30/09
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06/30/08
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Net
cash provided by operating activities
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$ | 51.1 | $ | 106.6 | $ | 59.2 | $ | 193.8 | ||||||||
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Add
back: Net increase (decrease) in current assets
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(5.0 | ) | 29.2 | 8.0 | 29.3 | |||||||||||
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Add
back: Net decrease (increase) in current liabilities
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8.8 | (35.8 | ) | 69.1 | (26.0 | ) | ||||||||||
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Discretionary
cash flow
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$ | 54.9 | $ | 100.0 | $ | 136.3 | $ | 197.1 | ||||||||
2
Berry
Petroleum Company - Second Quarter Ended June 30, 2009
Results
Teleconference
Call
An
earnings conference call will be held Tuesday, August 4, 2009 at 1:30 p.m.
Eastern Time (11:30 a.m. Mountain Time). Dial 1-866-783-2141 to
participate, using passcode 18607570. International callers may dial
857-350-1600. For a digital replay available until August 11, 2009
dial 1-888-286-8010 (passcode 16395344). Listen live or via replay on the web at
http://www.bry.com.
Transcripts of this and previous calls may be viewed at www.bry.com in the
“Investor Center.”
About
Berry Petroleum Company
Berry
Petroleum Company is a publicly traded independent oil and gas production and
exploitation company with operations in California, Utah, Colorado and Texas.
The Company uses its web site as a channel of distribution of material
company information. Financial and other material information
regarding the Company is routinely posted on and accessible
at:
http://www.bry.com/index.php?page=investor
Safe
harbor under the “Private Securities Litigation Reform Act of 1995”
Any
statements in this news release that are not historical facts are
forward-looking statements that involve risks and uncertainties. Words such as
"expected," "project," and forms of those words and others indicate
forward-looking statements. Important factors which could affect actual results
are discussed in PART 1, Item 1A. Risk Factors of Berry's 2008 Form 10-K filed
with the Securities and Exchange Commission on February 25, 2009 under the
heading "Other Factors Affecting the Company's Business and Financial Results,”
and updated in the Company’s Form 10-Q filings subsequent to that
date.
Cautionary Note to U.S. Investors
The
United States Securities and Exchange Commission permits oil and gas companies,
in their filings with the SEC, to disclose only proved reserves that a company
has demonstrated by actual production or conclusive formation tests to be
economically and legally producible under existing economic and operating
conditions. We use certain terms in this press release, such as "oil in place",
that the SEC's guidelines strictly prohibit us from including in filings with
the SEC. U.S. Investors are urged to consider closely the disclosure in our
Forms 10-K and 10-Q, File No. 1-9735, available from us at www.bry.com. You can
also obtain these forms from the SEC by calling 1-800-SEC-0330.
3
Berry
Petroleum Company - Second Quarter Ended June 30, 2009
Results
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CONDENSED
STATEMENTS OF INCOME (continuing operations)
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(In
thousands)
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(unaudited)
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Three Months
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Six
Months
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|||||||||||||||
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06/30/09
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06/30/08
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06/30/09
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06/30/08
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Revenues
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Sales
of oil and gas
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$ | 118,793 | $ | 169,022 | $ | 246,662 | $ | 320,688 | ||||||||
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Sales
of electricity
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6,624 | 16,979 | 16,895 | 32,906 | ||||||||||||
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Gas
marketing
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4,848 | 11,531 | 12,429 | 14,762 | ||||||||||||
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Gain
(loss) on commodity derivatives
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(31,130 | ) | (20 | ) | 6,034 | (728 | ) | |||||||||
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Gain
(loss) on sale of assets
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- | 414 | - | 414 | ||||||||||||
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Interest
and other income, net
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806 | 934 | 1,088 | 1,763 | ||||||||||||
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Total
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99,941 | 198,860 | 283,108 | 369,805 | ||||||||||||
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Expenses
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Operating
costs – oil &
gas
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34,738 | 52,332 | 72,122 | 91,672 | ||||||||||||
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Operating
costs – electricity
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6,397 | 15,515 | 15,179 | 31,914 | ||||||||||||
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Production
taxes
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4,885 | 6,568 | 10,537 | 11,751 | ||||||||||||
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Depreciation,
depletion & amortization - oil & gas
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34,371 | 25,902 | 70,769 | 50,108 | ||||||||||||
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Depreciation,
depletion & amortization - electricity
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1,028 | 652 | 1,987 | 1,345 | ||||||||||||
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Gas
marketing
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4,232 | 11,071 | 11,516 | 14,053 | ||||||||||||
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General
and
administrative
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13,164 | 10,929 | 26,457 | 22,061 | ||||||||||||
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Interest
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10,589 | 3,552 | 20,639 | 6,879 | ||||||||||||
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Loss
on extinguishment of
debt
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10,492 | - | 10,494 | - | ||||||||||||
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Dry
hole, abandonment, impairment & exploration
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17 | 3,180 | 140 | 5,908 | ||||||||||||
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Total
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119,913 | 129,701 | 239,840 | 235,691 | ||||||||||||
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Income
before income
taxes
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(19,972 | ) | 69,159 | 43,268 | 134,114 | |||||||||||
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Provision
for income
taxes
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(7,204 | ) | 25,447 | 14,258 | 50,866 | |||||||||||
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Income
from continuing operations
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(12,768 | ) | 43,712 | 29,010 | 83,248 | |||||||||||
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(Loss)
income from discontinued operations, net
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(212 | ) | 5,429 | (6,991 | ) | 8,924 | ||||||||||
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Net
income
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$ | (12,980 | ) | $ | 49,141 | $ | 22,019 | $ | 92,172 | |||||||
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Basic
net income from continuing operations per
share
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$ | (0.28 | ) | $ | 0.97 | $ | 0.63 | $ | 1.85 | |||||||
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Basic
net (loss) income from discontinued operations per common
share
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$ | - | $ | 0.12 | $ | (0.15 | ) | $ | 0.20 | |||||||
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Basic
net income per common share
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$ | (0.28 | ) | $ | 1.09 | $ | 0.48 | $ | 2.05 | |||||||
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Diluted
net income from continuing operations per
share
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$ | (0.28 | ) | $ | 0.95 | $ | 0.63 | $ | 1.82 | |||||||
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Diluted
net (loss) income from discontinued operations per common
share
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$ | - | $ | 0.12 | $ | (0.15 | ) | $ | 0.19 | |||||||
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Diluted
net income per common share
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$ | (0.28 | ) | $ | 1.07 | $ | 0.48 | $ | 2.01 | |||||||
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Cash
dividends per
share
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$ | 0.075 | $ | 0.075 | $ | 0.15 | $ | 0.15 | ||||||||
4
Berry
Petroleum Company - Second Quarter Ended June 30, 2009
Results
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CONDENSED
BALANCE SHEETS
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(In
thousands)
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||||||||
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(unaudited)
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||||||||
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06/30/09
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12/31/08
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Assets
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Current
assets
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$ | 112,878 | $ | 188,893 | ||||
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Property,
buildings & equipment, net
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2,096,966 | 2,254,425 | ||||||
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Fair
value of derivatives
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3,614 | 79,696 | ||||||
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Other
assets
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32,888 | 19,182 | ||||||
| $ | 2,246,346 | $ | 2,542,196 | |||||
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Liabilities
& Shareholders’ Equity
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Current
liabilities
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$ | 115,438 | $ | 260,438 | ||||
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Deferred
taxes
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243,537 | 270,323 | ||||||
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Long-term
debt
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1,085,193 | 1,131,800 | ||||||
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Other
long-term liabilities
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45,775 | 47,888 | ||||||
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Fair
value of derivatives
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40,462 | 4,203 | ||||||
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Shareholders’
equity
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715,941 | 827,544 | ||||||
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$ | 2,246,346 | $ | 2,542,196 | ||||
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CONDENSED
STATEMENTS OF CASH FLOWS
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(In
thousands)
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||||||||
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(unaudited)
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||||||||
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Six
Months
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||||||||
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06/30/09
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06/30/08
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Cash
flows from operating activities:
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Net
income
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$ | 22,019 | $ | 92,172 | ||||
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Depreciation,
depletion & amortization (DD&A)
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74,944 | 57,493 | ||||||
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Loss
on debt issuance costs
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10,494 | - | ||||||
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Dry
hole & impairment
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9,643 | 5,332 | ||||||
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Commodity
derivatives
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8,287 | 494 | ||||||
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Stock
based compensation
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4,980 | 4,412 | ||||||
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Deferred
income taxes
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8,091 | 39,030 | ||||||
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Gain
on sale of asset
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330 | (414 | ) | |||||
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Other,
net
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(27,550 | ) | 11,637 | |||||
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Net
changes in operating assets and liabilities
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(52,058 | ) | (16,342 | ) | ||||
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Net
cash provided by operating activities
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59,180 | 193,814 | ||||||
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Net
cash provided by (used in) investing activities
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41,177 | (237,617 | ) | |||||
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Net
cash provided by (used in) financing activities
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(100,361 | ) | 49,070 | |||||
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Net
increase in cash and cash equivalents
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(4 | ) | 5,267 | |||||
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Cash
and cash equivalents at beginning of year
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240 | 316 | ||||||
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Cash
and cash equivalents at end of period
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$ | 236 | $ | 5,583 | ||||
5
Berry
Petroleum Company - Second Quarter Ended June 30, 2009
Results
COMPARATIVE
OPERATING STATISTICS
(Unaudited)
Three
Months
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June
30, 2009
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%
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June
30, 2008
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%
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March
31, 2009
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%
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Heavy
Oil Production (Bbl/D)
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16,822
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57
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16,888
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58
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16,436
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50
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Light
Oil Production (Bbl/D)
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3,085
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11
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3,723
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13
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3,066
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9
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Total
Oil Production (Bbl/D)
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19,907
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68
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20,611
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71
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19,502
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59
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Natural
Gas Production (Mcf/D)
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56,174
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32
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50,339
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29
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82,979
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41
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Total
Production (BOE/D)
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29,270
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100
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29,000
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100
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33,332
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100
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DJ
Basin Production (BOE/D)
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-
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3,269
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3,101
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Production
– Continuing Operations (BOE/D)
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29,270
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25,731
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30,231
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Oil
and gas BOE for continuing operations:
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Average
sales price before hedging
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$
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39.34
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$
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96.55
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$
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29.36
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Average
sales price after hedging
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45.74
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71.64
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47.11
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Oil,
per Bbl, for continuing operations:
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Average
WTI price
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$
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59.79
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$
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123.80
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$
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43.24
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|||||||
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Price
sensitive royalties
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(2.08
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)
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(5.92
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)
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(1.02
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)
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Quality
differential and other
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(7.86
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)
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(11.52
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)
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(9.53
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)
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Crude
oil hedges
|
8.91
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(29.37
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)
|
23.79
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Average
oil sales price after hedging
|
$
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58.76
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$
|
76.99
|
$
|
56.48
|
|||||||
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Natural
gas price for continuing operations:
|
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|
Average
Henry Hub price per MMBtu
|
$
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3.51
|
$
|
10.49
|
$
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4.90
|
|||||||
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Conversion
to Mcf
|
0.18
|
0.53
|
0.25
|
||||||||||
|
Natural
gas hedges
|
0.21
|
-
|
1.14
|
||||||||||
|
Location,
quality differentials and other
|
(0.72
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)
|
(1.87
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)
|
(1.27
|
)
|
|||||||
|
Average
gas sales price after hedging per Mcf
|
$
|
3.18
|
$
|
9.15
|
$
|
5.02
|
# #
#
6