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): February 14, 2008
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
February 14, 2008, Berry Petroleum Company issued a news release announcing
its
financial and operational results for the fourth quarter and full-year ended
December 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 February 14, 2008, titled
"Berry
Petroleum Reports 2007 Earnings of $2.89 Per Share and Record Production
of
26,900 BOE/D"announcing the Registrant's results for the fourth quarter
and
full-year ended December 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: February
14, 2008
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2
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Berry
Petroleum Company News Release5201
Truxtun Ave., Bakersfield, CA
93309 www.bry.com 661-616-3900
BerryPetroleum
Reports 2007 Earnings of $2.89 Per
Share and Record
Productionof 26,900
BOE/D
Achieved
fourth quarter earnings of $.71
per share and average production of over 28,000 BOE/D
Bakersfield,
Calif. -- (BUSINESS
WIRE) -- February 14, 2008 -- Berry Petroleum
Company
(NYSE:BRY) earned net income of $130 million, or $2.89 per diluted share, for
the twelve months ended December 31, 2007, up 20% from 2006 net income of $108
million, or $2.41 per diluted share, according to Robert F. Heinemann, president
and chief executive officer. The
Company recorded pre-tax gains on the sale of non-core assets of $54.2 million
and incurred dry hole, abandonment, impairment and exploration charges of $13.7
million in 2007. On an after-tax basis these items resulted in $25
million of net income, included above, or $.56 per diluted share. For the fourth
quarter of 2007, Berry earned $32.3 million, or $.71 per diluted share, compared
to net income of $19.1 million, or $.43 per diluted share, in the fourth quarter
of 2006.
For
2007,
net production averaged a record 26,902 barrels of oil equivalent per day
(BOE/D) , an increase of 6% from the 25,398 BOE per day achieved in 2006. The
average realized sales price, net of hedging, for the full-year 2007 was $47.50
per BOE, up 2% over the $46.67 per BOE received in the 2006
period. Oil and gas revenues rose 9% to $467 million in 2007 from
$430 million in 2006.
For
2007
and 2006, net production in BOE per day was as follows:
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2007
Production
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2006
Production
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Oil
(Bbls)
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19,753 | 73 | % | 19,679 | 77 | % | ||||||||||
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Natural
Gas (BOE)
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7,149 | 27 | % | 5,719 | 23 | % | ||||||||||
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Total
BOE per day
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26,902 | 100 | % | 25,398 | 100 | % | ||||||||||
Discretionary
cash flow totaled a record $260 million in 2007, up 6% from $246 million in
2006. (Discretionary cash flow is a non-GAAP measure; see reconciliation below.)
The Company drilled 442 gross (339 net) wells in 2007, with a success rate
of 98
percent.
Mr.
Heinemann stated, "Berry is a growing company focused on execution, and as
a
result we had a year of significantly improved performance from several key
assets. Our diatomite and Poso Creek heavy oil assets had strong increases
in
average 2007 production to 990 BOE/D and 1,950 BOE/D, up 215% and 108%
respectively. We are targeting these assets to achieve average 2008
production of 2,200 BOE/D and 3,270 BOE/D, respectively. Our
average 2007 production from our Piceance and DJ basin gas assets also had
significant growth, up 138% and 17% to 10,290 Mcf/D and 18,740 Mcf/D,
respectively.
"We
are
anticipating our 2008 Piceance average production to increase to 21,600 Mcf/D,
another 110% increase over 2007. Our target is to drill 60 gross
wells (35 net) on this asset in 2008. We achieved one of our key
Piceance targets in 2007 which was to drill Garden Gulch mesa wells in fewer
than 18 days. We expect to continue to improve our Piceance drilling program
going forward. Our Uinta assets continued to perform well upon our
entering into a new crude oil sales contract early in 2007. Our S. Midway asset
in California is mature and our goal in 2008 is to reduce the natural decline
to
between 5% and 8% through additional drilling on the flanks of the reservoir,
utilizing horizontal wells and improved steaming techniques.
"Our
2008 capital budget is $295 million, including $15 million earmarked for
exploration. We are targeting over a 10% increase in both production and net
reserves to end 2008 with between 180 million and 190 million BOE of proved
reserves and average production of between 29,500 and 30,500 BOE/D. Our primary
means to accomplish these targets is to move quickly on our drill-ready oil
projects where we have significant rates of returns at the current commodity
price mix which favors steam-enhanced oil recovery and to continue to drill
up
our probable reserves in the Piceance."
2007
Reserves
Estimated
proved oil and gas reserves
increased by 13% to 169 million BOE as of December 31, 2007.
In 2007, Berry added 35.4 million BOE
at a finding and development cost of $10.07per
BOE (see
supporting cost schedule below)
and replaced 293% of
the
9.8 million BOE (26,902 BOE/D)
it produced in 2007. Berry’s
three-year finding and development
cost is an average $12.23 per BOE and its three-year reserve replacement rate
is
316%. At year-end 2007, the
Company’s reserve mix includes 117 million barrels of crude oil, condensate and
natural gas liquids, and 316 billion cubic feet of natural gas, or 69% oil and 31%
natural
gas. Geographically,
60%
of proved reserves are in California and
40%
are
in
the Rocky Mountain
region.
The Company’s year-end
reserves-to-production ratio increased slightly to 16.5
years, based on annualized
fourth quarter
2007 average daily production. Proved developed reserves
represent
61% of total proved reserves.
Fourth
Quarter 2007
For
the
fourth quarter of 2007, oil and gas revenues were $133 million and discretionary
cash flow was $77 million. The Company drilled 96 gross (80 net) wells in the
fourth quarter of 2007, with a success rate of 100 percent. The Company
recognized a $2.9 million pre-tax gain on the sale of stock and had a pre-tax
impairment charge of $3.3 million associated with its Coyote Flats, Utah
asset.
Production
averaged a record 28,023 barrels of oil equivalent per day (BOE/D), an increase
of 4% over fourth quarter 2006 (26,889 BOE/D) and up 4% from the third quarter
of 2007. The average realized sales price after hedging was $52.32 per
BOE, up 25% from $42.00 per BOE achieved in the fourth quarter of 2006 and
up 9% from $47.93 in the third quarter of 2007.
Ralph
J. Goehring, executive vice president
and chief
financial officer, stated, “Our capital expenditures for 2007totaled
$341 million
consisting of $285 million in
development and $56
million in acquisitions. We
also capitalized $18
million of interest. We funded these
items from $260
million
of discretionary
cash flow, asset sales of
$72 million and the balancefrom additional borrowings.
This
compares to our total capital expenditures in 2006 of
$544
million,
which consisted of
$258 million
of acquisitions and $286
million in development and
other assets. In
2006, we capitalized $9
million of interest. Based on $75 per barrel West
Texas
Intermediate
pricing
for
oil and $7.50 per Mcf Henry
Hub pricing for natural
gas,
we expect our 2008 cash
provided by operating activities to be
between $315
million and $335
million, which will fund
our entire
2008 development and
exploration program. We
expect our year-end
2007 debt of $459 million to be
relatively unchanged at year-end
2008, based on these commodity
prices and our production expectations.
" In
2007, we achieved a 29%
return on average shareholders
equity, and
a 16%
return on average capital
employed. This is our sixth
consecutive
year ofhaving achieved greater
than 15% return
for each of these measures.
"Our
previously announced plan to form a
master limited partnership for certain of our assets is currently on hold due
to unfavorable capital market conditions. We will continue to
monitor the economic conditions relevant to a successful
offering."
(more)
Contact:
Berry Petroleum Company - 5201 Truxtun Ave., Bakersfield, CA 93309 -
661-616-3900
1
Berry
Petroleum Company News
Release|
Finding
&
Development
Cost
Supporting Schedule
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All
expenditure amounts below are estimates
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(Amounts
in millions)
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One
Year
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Three
Year
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Acquisition
Costs
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$ | 56.25 | $ | 436.01 | ||||
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Exploration
Costs
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0.70 | 21.46 | ||||||
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Development
Costs
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281.70 | 671.56 | ||||||
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Other
Costs
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18.10 | 27.40 | ||||||
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Net
Expenditures
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$ | 356.75 | $ | 1,156.43 | ||||
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Total
reserves added, excluding production (MMBOE)
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35.44 | 94.57 | ||||||
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Estimated
finding & development cost per BOE
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$ | 10.07 | $ | 12.23 | ||||
Explanation
and Reconciliation of Non-GAAP
Financial
Measures
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Three
Months
Ended
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Twelve
Months
Ended
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12/31/07
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9/30/07
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12/31/06
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12/31/07
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12/31/06
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Net
cash provided by operating
activities
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$ | 63.7 | $ | 92.5 | $ | 58.1 | $ | 248.3 | $ | 243.2 | ||||||||||
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Add
back: Net increase (decrease)
in current assets
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37.1 | 5.7 | (1.6 | ) | 47.9 | 16.3 | ||||||||||||||
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Add
back: Net increase in current
liabilities
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(23.5 | ) | (27.7 | ) | (4.7 | ) | (36.6 | ) | (13.3 | ) | ||||||||||
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Discretionary
cash
flow
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$ | 77.3 | $ | 70.5 | $ | 51.8 | $ | 259.6 | $ | 246.2 | ||||||||||
Teleconference
Call
An
earnings conference call will be held
Thursday,
February 14, 2008at 1:30
p.m.Eastern Time (10:30
a.m.Pacific Time). Dial
1-866-770-7120to
participate, using passcode
81132745. International
callers may
dial 617-213-8065. For
a digital replay
available until February
28, 2008dial 1-888-286-8010
(passcode 14739821).
Listen live or via replay on the web
at www.bry.com. Transcripts of this and previous calls may be viewed at
www.bry.comin
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 including among other things, that the MLPwill
not be formed, will not complete an
offering of securities and will not complete such actions on any timetable.
Words such as "plans," "will,"
"expect," "target," "goal,"
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
2006 Form 10-K filed with the Securities and Exchange Commission on February 28, 2007under
the heading "Other Factors
Affecting the Company's Business and Financial Results" in the section titled
"Management's Discussion and Analysis of Financial Condition and Results of
Operations and all material changes are updated in Part II, Item 1A within
our
Form 10-Qs filed subsequent to that date."
This announcement
shall not constitute an offer to sell or the solicitation of an offer to buy
any
securities, nor shall there be any sale of any securities in any state or
jurisdiction in which the offer, solicitation or sale of securities would be
unlawful. Such securities will only be offered and sold pursuant to a
registration statement filed under the Securities Act of 1933, as
amended.
(more)
Contact:
Berry Petroleum Company - 5201 Truxtun Ave., Bakersfield, CA 93309 -
661-616-3900
2
Berry
Petroleum Company News
Release|
CONDENSED
INCOME STATEMENTS
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(In
thousands, except per share data)
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(unaudited)
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Three
Months
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Twelve
Months
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12/31/07
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12/31/06
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12/31/07
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12/31/06
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Revenues
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Sales
of oil and gas
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$ | 133,467 | $ | 101,755 | $ | 467,400 | $ | 430,497 | ||||||||
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Sales
of electricity
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14,915 | 13,456 | 55,619 | 52,932 | ||||||||||||
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Gain
on sale of assets
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2,356 | 97 | 54,173 | 97 | ||||||||||||
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Interest
and other, net
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2,511 | 915 | 6,265 | 2,812 | ||||||||||||
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Total
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153,249 | 116,223 | 583,457 | 486,338 | ||||||||||||
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Expenses
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Operating
costs – oil &
gas
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37,889 | 33,804 | 141,218 | 117,624 | ||||||||||||
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Operating
costs – electricity
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10,966 | 12,126 | 45,980 | 48,281 | ||||||||||||
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Production
taxes
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4,918 | 2,840 | 17,215 | 14,674 | ||||||||||||
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Depreciation,
depletion & amortization - oil & gas
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28,212 | 20,335 | 93,691 | 67,668 | ||||||||||||
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Depreciation,
depletion & amortization - electricity
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907 | 817 | 3,568 | 3,343 | ||||||||||||
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General
and
administrative
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10,918 | 11,231 | 40,210 | 36,841 | ||||||||||||
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Interest
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3,693 | 3,503 | 17,287 | 10,247 | ||||||||||||
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Commodity
derivatives
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- | - | - | (736 | ) | |||||||||||
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Dry
hole, abandonment, impairment & exploration
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4,315 | 939 | 13,657 | 12,009 | ||||||||||||
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Total
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101,818 | 85,595 | 372,826 | 309,951 | ||||||||||||
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Income
before income
taxes
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51,431 | 30,628 | 210,631 | 176,387 | ||||||||||||
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Provision
for income
taxes
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19,170 | 11,514 | 80,703 | 68,444 | ||||||||||||
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Net
income
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$ | 32,261 | $ | 19,114 | $ | 129,928 | $ | 107,943 | ||||||||
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Basic
net income per
share
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$ | 0.73 | $ | 0.44 | $ | 2.95 | $ | 2.46 | ||||||||
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Diluted
net income per
share
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$ | 0.71 | $ | 0.43 | $ | 2.89 | $ | 2.41 | ||||||||
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Cash
dividends per
share
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$ | 0.075 | $ | 0.075 | $ | .30 | $ | .30 | ||||||||
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Weighted
average common shares:
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Basic
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44,238 | 43,848 | 44,075 | 43,948 | ||||||||||||
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Diluted
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45,238 | 44,592 | 44,906 | 44,774 | ||||||||||||
(more)
Contact:
Berry Petroleum Company - 5201 Truxtun Ave., Bakersfield, CA 93309 -
661-616-3900
3
Berry
Petroleum Company News
Release|
CONDENSED
BALANCE SHEETS
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(In
thousands)
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(unaudited)
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12/31/07
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12/31/06
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Assets
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Current
assets
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$ | 161,019 | $ | 98,809 | ||||
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Property,
buildings & equipment, net
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1,275,091 | 1,080,631 | ||||||
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Other
assets
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15,996 | 19,557 | ||||||
| $ | 1,452,106 | $ | 1,198,997 | |||||
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Liabilities
& Shareholders’ Equity
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Current
liabilities
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$ | 271,369 | $ | 215,403 | ||||
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Deferred
taxes
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128,824 | 103,515 | ||||||
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Long-term
debt
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445,000 | 390,000 | ||||||
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Other
long-term liabilities
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146,939 | 62,379 | ||||||
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Shareholders’
equity
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459,974 | 427,700 | ||||||
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$ | 1,452,106 | $ | 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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Twelve
Months
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12/31/07
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12/31/06
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Cash
flows from operating activities:
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Net
income
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$ | 129,928 | $ | 107,943 | ||||
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Depreciation,
depletion & amortization (DD&A)
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97,258 | 71,011 | ||||||
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Dry
hole & impairment
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12,951 | 8,253 | ||||||
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Deferred
income taxes
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64,826 | 51,666 | ||||||
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Commodity
derivatives
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574 | (109 | ) | |||||
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Stock
based compensation
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8,200 | 6,436 | ||||||
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Gain
on sale of asset
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(54,173 | ) | (97 | ) | ||||
| Abandonment | (1,188 | ) | 606 | |||||
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Other,
net
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1,201 | 544 | ||||||
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Net
changes in operating assets and liabilities
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(11,298 | ) | (3,024 | ) | ||||
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Net
cash provided by operating activities
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248,279 | 243,229 | ||||||
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Net
cash used in investing activities
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(287,213 | ) | (548,783 | ) | ||||
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Net
cash provided by financing activities
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38,834 | 303,980 | ||||||
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Net
decrease in cash and cash equivalents
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(100 | ) | (1,574 | ) | ||||
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Cash
and cash equivalents at beginning of year
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416 | 1,990 | ||||||
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Cash
and cash equivalents at end of period
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$ | 316 | $ | 416 | ||||
(more)
Contact:
Berry Petroleum Company - 5201 Truxtun Ave., Bakersfield, CA 93309 -
661-616-3900
4
Berry
Petroleum Company News
Release|
COMPARATIVE
OPERATING STATISTICS
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(unaudited)
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Three
Months
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Twelve
Months
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12/31/07
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12/31/06
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Change
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12/31/07
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12/31/06
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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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28,023 | 26,889 | 4 | % | 26,902 | 25,398 | 6 | % | ||||||||||||||||
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Per
BOE:
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Average
sales price before hedges
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$ | 60.38 | $ | 41.53 | 45 | % | $ | 49.72 | $ | 48.38 | 3 | % | ||||||||||||
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Average
sales price after hedges
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$ | 52.32 | $ | 42.00 | 25 | % | $ | 47.50 | $ | 46.67 | 2 | % | ||||||||||||
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Operating
costs
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$ | 14.70 | $ | 13.69 | 7 | % | $ | 14.38 | $ | 12.69 | 13 | % | ||||||||||||
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Production
taxes
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1.91 | 1.15 | 66 | % | 1.75 | 1.58 | 11 | % | ||||||||||||||||
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Total
operating costs
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16.61 | 14.84 | 12 | % | 16.13 | 14.27 | 13 | % | ||||||||||||||||
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DD&A -
oil and
gas
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10.94 | 8.24 | 33 | % | 9.54 | 7.30 | 31 | % | ||||||||||||||||
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General
& administrative expenses
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4.24 | 4.55 | -7 | % | 4.09 | 3.98 | 3 | % | ||||||||||||||||
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Interest
expense
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$ | 1.43 | $ | 1.27 | 13 | % | $ | 1.76 | $ | 1.05 | 68 | % | ||||||||||||
#
# #
Contact:
Berry Petroleum Company - 5201 Truxtun
Ave., Bakersfield, CA 93309 - 661-616-3900