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 1, 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 August
1, 2007, Berry Petroleum Company issued a news release announcing its financial
and operational results for the second quarter ended June 30, 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 August 1, 2007, titled "Berry
Petroleum Earns $1.16 Per Share in Second Quarter 2007"announcing the
Registrant's results for the second quarter ended June 30, 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: August
1, 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 $1.16 Per Share in Second Quarter 2007
Record
Production of 27,195 BOE/D is Up 10% Over Second Quarter
2006
Bakersfield,
Calif. -- (BUSINESS WIRE) -- August 1, 2007 -- Berry Petroleum Company
(NYSE:BRY) earned net income of $52 million, or $1.16 per diluted share,
for the
three months ending June 30, 2007, up from net income of $34.2 million,
or $.76
per diluted share in the second quarter of 2006, according to Robert
F.
Heinemann, president and chief executive officer. Excluding a net
gain related to the disposition of non-core assets, net income for the
three
months ended June 30, 2007 was $23.2 million or $.52 per diluted
share.
Revenues
increased by 46% to $179 million for the second quarter of 2007 compared
to the
second quarter of 2006. Excluding the asset disposition gain of $50.4
million,
revenues for the three months ended June 30, 2007 are $129 million, or
a 5%
increase. Discretionary cash flow totaled $59 million in the second quarter
of
2007, down from $66 million in the comparable 2006 period, but higher
than the
$53 million achieved in the first quarter of 2007. (Discretionary cash
flow is a
non-GAAP measure; see reconciliation below.)
For
the
second quarter of 2007, net production averaged a record 27,195 barrels
of oil
equivalent per day (BOE/D), an increase of 10% from the 24,768 BOE per
day
achieved in the second quarter of 2006 and an increase of 7% compared
to first
quarter 2007 production of 25,490 BOE/D. Natural gas production in the
second
quarter of 2007 was up 26% over the second quarter of 2006.
Mr.
Heinemann stated, “The crude marketing issues related to our Brundage
Canyon black wax crude in Utah have been resolved and production there
has
increased to over 6,300 BOE/D in the second quarter, from a low of 3,800
BOE/D
in January of 2007. We are now intensifying our focus on our western
Colorado
Piceance asset where we are making good progress on our mesa drilling
program
during the summer months. Drilling activities included 31 gross (8 net)
wells in
the Piceance during the quarter and production increased 31% over the
first
quarter of 2007 to 8.3 MMcf/D. Drilling performance on the vertical mesa
wells
has improved, and we are working to reduce drilling time on the directional
holes. We continue to be encouraged by the reservoir productivity and
are
targeting third quarter net production of 12.5 MMcf/D as a significant
number of
wells are brought on-line.
“In
California we achieved a 50% production increase from the diatomite asset
without drilling additional wells during the quarter. This is a result
of more
aggressive steam cycling and improved well performance. Average daily
production
was over 900 BOE/D in the second quarter of 2007, compared to 600 BOE/D
in the
first quarter. Production continues to increase and we anticipate producing
over
1,000 BOE/D in the third quarter. We will begin a 50-well drilling program
in
the latter part of the third quarter and will add facilities as
needed.
1
“Based
on
encouraging results from our Poso Creek asset we continue with our accelerated
drilling program there. We drilled 49 wells during the second quarter
and we
secured additional capacity to meet the demand for expanded steam
requirements. In the DJ basin we have been able to increase
production from our Niobrara natural gas assets over 10% from the first
quarter
to record levels with modest capital outlays.”
The
average realized sales price per barrel of oil equivalent (BOE), net
of hedging,
for the second quarter of 2007 was $45.43 per BOE, down 9% from the $49.75
per
BOE received in the same 2006 period but was 4% higher than the $43.84
per BOE
received in the first quarter of 2007.
In
the
second quarter of 2007, Berry sold its non-core West Montalvo asset in
Ventura
County, California for a pre-tax gain of $50.4 million. Berry also incurred
an
impairment charge of $2.9 million to reduce the carrying value of its
Bakken
asset in the Williston Basin, North Dakota to estimated fair market
value.
Six
Months Results
Net
income for the six months of 2007 was $70.8 million or $1.58 per diluted
share,
up 23% from $57.5 or $1.28 per diluted share in the comparable 2006 period.
Excluding an asset sale and impairment of an asset held for sale for
a combined
net after-tax gain of $28.8 million, net income for the six months ended
June
30, 2007 was $42.0 million or $.94 per diluted share, compared to $57.5
million
or $1.28 per diluted share for the first six months of 2006. This decrease
is
due to lower realized oil and gas prices and higher operating costs,
increased
depreciation, depletion & amortization (DD&A) charges related to
increased development activity and increased interest expense.
Discretionary
cash flow totaled $112 million for the first six months of 2007, down
from $121
million in the comparable 2006 period.
For
the
six months ended June 30, 2007, net production averaged 26,332 BOE/D,
an
increase of 9% from the 24,118 BOE/D achieved in the same period in 2006.
The
average realized sales price per BOE, net of hedging, for the six months
ended
June 30, 2007 was $44.72 per BOE, down 9% from the $48.92 per BOE received
in
the 2006 period.
Mr.
Heinemann continued, “Although we are enjoying strong crude oil prices for our
increasing California production, Rockies gas prices continue to be volatile
due
to various factors, including takeaway pipeline capacity, supply volumes,
and
regional demand issues. We expect the Colorado Interstate Gas (CIG) basis
differential to narrow upon the startup of the Rockies Express Pipeline
(REX)
which is anticipated in 2008. We have contracted 10,000 MMBtu/D on this
pipeline
to provide assurance of gas delivery. The CIG basis differential per
MMBtu,
based upon first-of-month values, averaged $3.78 below Henry Hub (HH)
and ranged
from $2.92 to $4.37 below HH in the second quarter.”
2
Operations
During
the second quarter of 2007 the Company drilled 123 gross (88 net) wells
with a
success rate of 98 percent. For the second quarter of 2007 and 2006,
average net
production in BOE per day from each of Berry’s operating regions was as
follows:
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Second
Quarter by Region
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2007
Production
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2006
Production
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California
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16,214
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60 | % |
15,617
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63 | % | ||||||||||
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Rocky
Mountain Region
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10,981
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40 | % |
9,151
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37 | % | ||||||||||
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Total
BOE per day
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27,195
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100 | % |
24,768
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100 | % | ||||||||||
The
mix
of average net oil and natural gas production was as follows:
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Second
Quarter by Mix
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2007
Production
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2006
Production
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Oil
(Bbls)
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20,163
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74 | % |
19,593
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79 | % | ||||||||||
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Natural
Gas (BOE)
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7,032
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26 | % |
5,175
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21 | % | ||||||||||
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Total
BOE per day
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27,195
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100 | % |
24,768
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100 | % | ||||||||||
Ralph
J.
Goehring, executive vice president and chief financial officer, stated,
“We
expect development capital to total from $250 million to $280 million for
2007 and for the first six months of 2007 we have spent $151 million
of that
amount. We also paid $54 million for the third and final payment of
the Piceance acquisition out of the proceeds of the sale of our West
Montalvo asset. At June 30, 2007, our debt level was $475 million, essentially
flat from the end of the first quarter of 2007.”
Explanation
and Reconciliation of Non-GAAP Financial Measures
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Three
Months Ended
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Six
Months Ended
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|||||||||||||||||||
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06/30/07
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06/30/06
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03/31/07
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6/30/07
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6/30/06
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Net
cash provided by operating activities
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$ |
80.4
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$ |
58.8
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$ |
11.6
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$ |
92.0
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$ |
84.1
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Add
back: Net increase (decrease) in current assets
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(8.2 | ) |
16.7
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13.3
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5.1
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18.6
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Add
back: Net decrease (increase) in current liabilities
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(13.5 | ) | (9.6 | ) |
28.1
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14.6
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18.7
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Discretionary
cash flow
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$ |
58.7
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$ |
65.9
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$ |
53.0
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$ |
111.7
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$ |
121.4
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Teleconference
Call
An
earnings conference call will be held Wednesday, August 1, 2007 at 1:30
p.m.
Eastern Time (10:30 a.m. Pacific Time). Dial 1-866-713-8307 to
participate, using passcode 18450946. International callers may dial
617-597-5307. For a digital replay available through August 15, 2007
dial 1-888-286-8010 (passcode 70245564). 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,”
“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-Qs filed subsequent
to that
date.
3
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CONDENSED
STATEMENTS OF INCOME
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(In
thousands)
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||||||||||||||||
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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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06/30/07
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06/30/06
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06/30/07
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06/30/06
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Revenues
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Sales
of oil and gas
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$ |
113,426
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$ |
110,641
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$ |
215,200
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$ |
212,575
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Sales
of electricity
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13,867
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11,715
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28,463
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26,884
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Gain
on sale of assets
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50,400
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50,398
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Interest
and other income, net
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1,536
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803
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2,647
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1,296
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Total
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179,229
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123,159
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296,708
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240,755
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Expenses
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Operating
costs – oil &
gas
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35,725
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27,074
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69,335
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52,813
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Operating
costs – electricity
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11,083
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10,626
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25,254
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24,958
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Production
taxes
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4,139
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3,373
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7,954
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6,606
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Depreciation,
depletion & amortization - oil & gas
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23,397
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16,263
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42,122
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29,359
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Depreciation,
depletion & amortization - electricity
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961
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807
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1,723
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1,701
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General
and
administrative
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9,651
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7,877
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19,958
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16,192
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Interest
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4,976
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2,460
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9,267
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4,038
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Commodity
derivatives
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-
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(5,563 | ) |
-
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(736 | ) | ||||||||||
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Dry
hole, abandonment & impairment, exploration
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3,519
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3,045
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4,168
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10,543
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Total
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93,451
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65,962
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179,781
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145,474
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Income
before income
taxes
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85,778
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57,197
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116,927
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95,281
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Provision
for income
taxes
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33,821
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22,994
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46,115
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37,827
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Net
income
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$ |
51,957
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$ |
34,203
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$ |
70,812
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$ |
57,454
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Basic
net income per
share
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$ |
1.18
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$ |
0.78
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$ |
1.61
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$ |
1.31
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Diluted
net income per
share
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$ |
1.16
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$ |
0.76
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$ |
1.58
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$ |
1.28
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Cash
dividends per
share
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$ |
0.075
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$ |
0.065
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$ |
0.150
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$ |
0.130
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Weighted
average common shares:
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Basic
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44,029
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44,053
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43,973
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44,020
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Diluted
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44,895
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44,939
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44,754
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44,955
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4
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CONDENSED
BALANCE SHEETS
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||||||||
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(In
thousands)
|
||||||||
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(unaudited)
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||||||||
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06/30/07
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12/31/06
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Assets
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Current
assets
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$ |
108,094
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$ |
98,809
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Properties,
buildings & equipment, net
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1,193,252
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1,080,631
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Other
assets
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16,485
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19,557
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| $ |
1,317,831
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$ |
1,198,997
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Liabilities
& Shareholders’ Equity
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||||||||
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Current
liabilities
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$ |
157,022
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$ |
215,403
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Deferred
income taxes
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127,385
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103,515
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Long-term
debt
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465,000
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390,000
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Other
long-term liabilities
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89,070
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62,379
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Shareholders’
equity
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479,354
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427,700
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$ |
1,317,831
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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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||||||||
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(unaudited)
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||||||||
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Six
Months
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||||||||
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06/30/07
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06/30/06
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Cash
flows from operating activities:
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Net
income
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$ |
70,812
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$ |
57,454
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Depreciation,
depletion & amortization (DD&A)
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43,845
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31,060
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Dry
hole, abandonment & impairment
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2,922
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6,375
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Commodity
derivatives
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675
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(674 | ) | |||||
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Stock-based
compensation
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3,779
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2,199
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Deferred
income taxes
|
39,695
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25,068
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Gain
on sale
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(50,398 | ) |
-
|
|||||
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Other,
net
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415
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(64 | ) | |||||
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Net
changes in operating assets and liabilities
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(19,701 | ) | (37,322 | ) | ||||
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Net
cash provided by operating activities
|
92,044
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84,096
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Net
cash used in investing activities
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(153,717 | ) | (271,431 | ) | ||||
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Net
cash provided by financing activities
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61,572
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185,971
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||||||
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Net
decrease in cash and cash equivalents
|
(101 | ) | (1,364 | ) | ||||
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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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$ |
315
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$ |
626
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5
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COMPARATIVE
OPERATING STATISTICS
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||||||||||||||||||||||||
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(unaudited)
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||||||||||||||||||||||||
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Three
Months
|
Six
Months
|
|||||||||||||||||||||||
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06/30/07
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06/30/06
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Change
|
06/30/07
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06/30/06
|
Change
|
||||||||||||||||||
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Oil
and gas:
|
||||||||||||||||||||||||
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Net production-BOE
per day
|
27,195
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24,768
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+10 | % |
26,332
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24,118
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+9 | % | ||||||||||||||||
|
Per
BOE:
|
||||||||||||||||||||||||
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Average
sales price before hedges
|
$ |
44.72
|
$ |
52.46
|
-15 | % | $ |
44.25
|
$ |
51.08
|
-13 | % | ||||||||||||
|
Average
sales price after hedges
|
45.43
|
49.75
|
-9 | % |
44.72
|
48.92
|
-9 | % | ||||||||||||||||
|
Operating
costs - oil and gas
|
14.44
|
12.01
|
+20 | % |
14.55
|
12.10
|
+20 | % | ||||||||||||||||
|
Production
taxes
|
1.67
|
1.50
|
+11 | % |
1.67
|
1.51
|
+11 | % | ||||||||||||||||
|
Total
operating costs
|
16.11
|
13.51
|
+19 | % |
16.22
|
13.61
|
+19 | % | ||||||||||||||||
|
DD&A -
oil and
gas
|
9.45
|
7.22
|
+31 | % |
8.84
|
6.73
|
+31 | % | ||||||||||||||||
|
General
& administrative expenses
|
3.90
|
3.49
|
+12 | % |
4.19
|
3.71
|
+13 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
Interest
expense
|
$ |
2.01
|
$ |
1.09
|
+84 | % | $ |
1.94
|
$ |
0.92
|
+111 | % | ||||||||||||
#
#
#
6