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): May 2, 2007
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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5201
TRUXTUN AVE., STE. 300, BAKERSFIELD, CA
(Address
of Principal Executive Offices)
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93309
(Zip
Code)
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Registrant’s
telephone number, including area code: (661)
616-3900
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))
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1
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Item
2.02 Results of Operations and Financial Condition
On
May 2,
2007, Berry Petroleum Company issued a news release announcing its financial
and
operational results for the first quarter ended March 31, 2007. 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
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News Release by Berry Petroleum Company dated May 2, 2007, titled "Berry
Petroleum Earns $.42 Per Share in First Quarter 2007"announcing the Registrant's
results for the first quarter ended March 31, 2007.
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: May
2, 2007
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2
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Berry
Petroleum Company News
Contact:
Berry Petroleum Company
5201
Truxtun Ave., Ste.
300
Bakersfield,
CA 93309
1-661-616-3900
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Contacts:
Robert F. Heinemann, President and CEO - - Ralph J. Goehring, Executive
Vice President and CFO
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Berry
Petroleum Earns $.42 Per Share in First Quarter 2007
Bakersfield,
Calif. -- (BUSINESS WIRE) -- May 2, 2007
--
Berry
Petroleum Company (NYSE:BRY) earned net income of $18.9 million, or $.42
per
diluted share, for the three months ending March 31, 2007, down from
net income
of $23.3 million, or $.52 per diluted share in the first quarter of 2006,
according to Robert F. Heinemann, president and chief executive officer.
For
the
first quarter of 2007, net production averaged 25,490 barrels of oil
equivalent
per day (BOE/d), an increase of 9% from the 23,461 BOE per day achieved
in the
first quarter of 2006 but down compared to fourth quarter 2006 production
of
26,889. The average realized sales price, net of hedging, for the first
quarter
of 2007 was $43.84 per BOE, down 10% from the $48.45 per BOE received
in the
2006 period. Revenues were flat at $117 million for each quarter period.
Discretionary cash flow totaled $53 million in the first quarter of 2007,
down
from $55.5 million in the comparable 2006 period, but higher than the
$51.7
million achieved in the fourth quarter. (Discretionary cash flow is a
non-GAAP
measure; see reconciliation below.)
Net
income for the first three months of 2007 was down from the comparable
2006
period due to lower realized oil and gas prices, higher operating costs
that
reflect a 15% increase in steam volumes in California, and increased
depreciation, depletion & amortization (DD&A) charges related to
increased development activity and increased interest expense.
Mr.
Heinemann stated, “We
have
a positive outlook for our production volumes going forward. For
2007
we are targeting net average production of between 27,000 and 28,000
BOE/d as we
see our production volumes growing in each of the remaining quarters
of 2007.
For
the
first quarter, production was down on our Uinta basin assets due to refinery
constraints which hampered crude deliveries and caused us to shut in
wells.
Production is back on track in the Uinta region at approximately 6,000
BOE/d.
1
Berry
Petroleum Company News - May 2, 2007
“Performance
of our California growth assets is good with solid increases in our Poso
Creek
and Ethel D production. We plan to accelerate development at Poso Creek
with
over 70 wells this year as the reservoir performance is above expectations.
Our
diatomite asset is performing well. It averaged 600 Bbl/d in the first
quarter
of 2007 compared to 400 Bbl/d in the fourth quarter of 2006 and is currently
approaching 1,000 Bbl/d with a field-wide steam to oil ratio of 7 to
1. Our next
phase for development drilling in the diatomite is scheduled for the
second half
of the year. Production from our most mature California assets declined
and we
are focused on improving the subsurface heat transfer here. Additionally,
we
plan to drill several horizontal infill wells on our South Midway-Sunset
properties in the second and third quarters of 2007.
“We
are
executing our development program as expected in the Piceance and DJ
basins. In
the Piceance basin, the completion of the Garden Gulch mesa pipeline
late in the
first quarter will enable significant production growth, and subsequent
to the
quarter end, three North Parachute Ranch wells and eight Garden Gulch
wells have
been completed and put on production. Twelve additional wells are expected
to be
drilled and on production by the end of the second quarter of 2007. We
are
making excellent progress in reducing our days to drill these wells,
and thus
reducing the cost, and have expectations to consistently drill our mesa
wells in
less than 25 days. Production from our Piceance wells is on target with
our
first 30 days production averaging in excess of 1.2 MMcf/d per well.
Companywide
we expect production in the second quarter to increase to average nearly
27,000
BOE/d.
“We
anticipate that our capital expenditures for 2007 will range from $227
million
to $267 million and will vary based on our cash flow and overall well
response.
Our cash flow from operations is expected to fund a high percentage of
our
development activities.
Operations
During
the first quarter of 2007 the Company drilled 124 gross (88 net) wells
with a
success rate of 99 percent. For the first quarter of 2007 and 2006, net
production in BOE per day from each of Berry’s operating regions was as
follows:
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2007
Production
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2006 Production | |||||||||||
| California | 16,184 | 63 | % | 15,505 | 66 | % | |||||||
| Rocky Mountain Region | 9,306 | 37 | % | 7,956 | 34 | % | |||||||
| Total BOE per day | 25,490 | 100 | % | 23,461 | 100 | % |
The
mix of oil and natural gas production was as
follows:
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2007
Production
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2006
Production
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| Oil Production (Bbls) | 19,373 | 76 | % | 18,710 | 80 | % | |||||||
| Natural Gas (BOE) | 6,117 | 24 | % | 4,751 | 20 | % | |||||||
| Total BOE per day | 25,490 | 100 | % | 23,461 | 100 | % | |||||||
Ralph
J.
Goehring, executive vice president and chief financial officer, stated,
“Total
oil and gas operating costs of $33.6 million in the first quarter of
2007 were
slightly less than the $33.8 million we incurred in the fourth quarter
of 2006.
On a per BOE basis our cost was up about 7% as production volumes were
down.
Cost pressures do remain, but we are working to offset them with improved
efficiencies. Our cost per BOE was up by 20% from the first quarter of
2006
primarily due to an increase in steam costs, company and contract labor
and
transportation, compression and gathering costs. We are moving forward
on the
sale of our Montalvo properties and expect to receive approximately $60
million
before adjustments in the second quarter. We have a very active development
program for the remainder of the year and expect to see increasing production,
and assuming stable oil and gas price realizations, increasing cash flows
and
earnings for the next several quarters.”
2
Berry
Petroleum Company News - May 2, 2007
Explanation
and Reconciliation of Non-GAAP Financial Measures
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Three
Months Ended
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03/31/07
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03/31/06
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12/31/06
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Net
cash provided by operating activities
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$
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11.6
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$
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25.3
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$
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58.1
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Add
back: Net increase (decrease) in current assets
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13.3
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1.9
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(1.7
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Add
back: Net decrease (increase) in current liabilities
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28.1
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28.3
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(4.7
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Discretionary
cash flow
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$
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53.0
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$
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55.5
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$
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51.7
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All
comparative per share amounts in this news release have been adjusted
for the
two-for-one stock split that became effective May 17, 2006.
Teleconference
Call
An
earnings conference call will be held Wednesday, May 2, 2007 at 1:30
p.m.
Eastern Time (10:30 a.m. Pacific Time). Dial 1-800-798-2801 to participate,
using passcode 36850955. International callers may dial 617-614-6205.
For a
digital replay available until May 16, 2007 dial 1-888-286-8010 (passcode
24310571). Listen live or via replay on the web at 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 its headquarters in Bakersfield, California.
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
“targeting,” “plan,” “will,” “anticipate,” “expect,” 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 our
2006 Form 10-K filed with the Securities and Exchange Commission on February
28,
2007 and
all
material changes are updated in Part II, Item 1A within our Form 10-Q
filed May
2, 2007.
3
Berry
Petroleum Company News - May 2, 2007
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CONDENSED
STATEMENTS OF INCOME
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(In
thousands)
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(unaudited)
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Three
Months
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03/31/07
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03/31/06(1
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Revenues
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Sales
of oil and gas
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$
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101,773
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$
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101,932
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Sales
of electricity
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14,596
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15,169
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Interest
and other income, net
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1,110
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493
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Total
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117,479
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117,594
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Expenses
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Operating
costs - oil &
gas
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33,610
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25,738
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Operating
costs - electricity
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14,170
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14,332
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Production
taxes
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3,815
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3,233
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Depreciation,
depletion & amortization - oil & gas
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18,725
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13,223
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Depreciation,
depletion & amortization - electricity
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762
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767
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General
and
administrative
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10,307
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8,314
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Interest
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4,292
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1,577
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Commodity
derivatives
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4,828
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Dry
hole, abandonment & impairment, exploration
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649
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7,498
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Total
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86,330
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79,510
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Income
before income
taxes
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31,149
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38,084
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Provision
for income
taxes
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12,294
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14,833
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Net
income
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$
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18,855
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$
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23,251
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Basic
net income per
share
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$
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0.43
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$
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0.53
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Diluted
net income per
share
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$
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0.42
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$
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0.52
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Cash
dividends per
share
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$
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0.075
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$
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0.065
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Weighted
average common shares:
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Basic
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43,916
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43,988
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Diluted
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44,631
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45,004
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(1)
The 2006
per share and share amounts have been restated to give retroactive effect
to the
two-for-one stock split that became effective on May 17, 2006.
4
Berry
Petroleum Company News - May 2, 2007
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CONDENSED
BALANCE SHEETS
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(In
thousands)
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(unaudited)
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03/31/07
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12/31/06
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Assets
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Current
assets
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$
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116,687
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$
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98,809
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Properties,
buildings & equipment, net
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1,142,892
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1,080,631
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Other
assets
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17,318
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19,557
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$
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1,276,897
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$
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1,198,997
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Liabilities
& Shareholders’ Equity
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Current
liabilities
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$
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188,566
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$
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215,403
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Deferred
income taxes
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102,758
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103,515
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Long-term
debt
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470,000
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390,000
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Other
long-term liabilities
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81,317
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62,379
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Shareholders’
equity
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434,256
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427,700
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$
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1,276,897
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$
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1,198,997
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CONDENSED
STATEMENTS OF CASH FLOWS
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(In
thousands)
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(unaudited)
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Three
Months
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03/31/07
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03/31/06
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Cash
flows from operating activities:
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Net
income
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$
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18,855
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$
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23,251
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Depreciation,
depletion & amortization (DD&A)
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19,487
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13,990
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Dry
hole, abandonment & impairment
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(68
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4,985
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Commodity
derivatives
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439
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4,828
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Stock-based
compensation
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1,792
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1,014
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Deferred
income taxes
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12,311
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7,464
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Other,
net
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209
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52
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Net
changes in operating assets and liabilities
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(41,408
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(30,267
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Net
cash provided by operating activities
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11,617
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25,317
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Net
cash used in investing activities
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(76,576
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(206,084
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Net
cash provided by financing activities
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64,638
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180,162
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Net
decrease in cash and cash equivalents
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(321
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(605
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Cash
and cash equivalents at beginning of year
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416
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1,990
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Cash
and cash equivalents at end of period
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$
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95
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$
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1,385
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5
Berry
Petroleum Company News - May 2, 2007
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COMPARATIVE
OPERATING STATISTICS
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(unaudited)
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Three
Months
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||||||||||
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||||||||||
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03/31/07
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03/31/06
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Change
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Oil
and gas:
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Net production-BOE
per day
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25,490
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23,461
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+9
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%
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Per
BOE:
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Average
sales price before hedges
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$
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43.62
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$
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50.04
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-13
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%
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Average
sales price after hedges
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$
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43.84
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$
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48.45
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-10
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%
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Operating
costs - oil and gas
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$
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14.65
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$
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12.19
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+20
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%
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Production
taxes
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1.66
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1.53
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+8
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%
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||||||
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Total
operating costs
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16.31
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13.72
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+
19
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%
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||||||
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DD&A -
oil and gas
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8.16
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6.26
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+30
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%
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||||||
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General
& administrative expenses
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4.49
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3.94
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+14
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%
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Interest
expense
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$
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1.69
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$
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0.75
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+125
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%
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#
#
#