SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
_____________________________
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) December 13, 1996
Berry Petroleum Company
(Exact name of registrant as specified in its charter)
Delaware 1-9735 77-0079387
_______________________________________________________________________
(State or other (Commission IRS Employer
jurisdiction of File Number) Identification No.
incorporation)
28700 Hovey Hills Road, P.O. Bin X, Taft, CA 93268
_______________________________________________________________________
(Address of principal executive offices)
Registrant's telephone number, including area code (805) 769-8811
________
N/A
_______________________________________________________________________
(Former name or former address, if changed since last report
2
On December 13, 1996, Berry Petroleum Company, a Delaware
corporation (the "Company"), purchased certain assets from Exxon
Corporation, a New Jersey corporation ("Exxon"), for the aggregate
consideration of $49.5 million (net of operations from July 1, 1996).
The consideration was paid from the Company's existing working capital
and borrowing from the Company's unsecured credit facility with
NationsBank of Texas. The effective date of the transaction, as
between the parties, was July 1, 1996.
The assets purchased include all of the outstanding capital stock
of San Joaquin Production Company ("SJPC"), a Louisiana corporation,
formerly known as the Exxon San Joaquin Production Company. The
primary assets of SJPC were all of the stock of the Formax Oil
Company, 100% owner of the Formax Properties which includes 200
acres of heavy oil producing properties and other assets associated
with heavy oil producing activities. The Formax oil producing
properties are located adjacent to the Company's South Midway-Sunset
field properties. At closing, these Formax properties were producing
about 1,050 barrels per day ("BPD") of heavy (13 degree API) crude oil
from 130 wells and had estimated reserves of approximately 20 million
barrels.
The Formax property is subject to a 2-1/2% convertible overriding
royalty to certain parties, plus a variable overriding royalty interest
("ORRI") reserved by Exxon on the net revenue interest held by the
Company. This ORRI provides for Exxon to receive an annual payment
equal to 75% of the posted price applicable for 13 degree API crude
oil in excess, if any, of a base price. The base price is defined
as $12.70 per barrel for 1996, escalated thereafter at 2% per year.
Item 7. Financial Statements and Exhibits.
(a). Financial Statements. Included herein.
(b). Pro Forma Financial Information. Included herein.
(c). Exhibits.
10.1 Stock Purchase Agreement, dated December 11, 1996, by
and between the Registrant and Exxon Corporation, a New
Jersey corporation. *
* Incorporated by reference to the original Form 8K filed
on EDGAR December 17, 1996, Accession Number 0000778438-
96-000023.
3
Berry Petroleum Company
FORMAX 8K/A INDEX
Report of Price Waterhouse L.L.P., 4
Independent Accountants
Historical Statement of Revenues and
Direct Operating Expenses for the Years Ended
December 31, 1994 and 1995 and for the
Nine Months Ended September 30, 1995 and 1996 5
Supplemental Information About Oil & Gas
Producing Activities (Unaudited) 7
Unaudited Pro Forma Financial Information 9
4
REPORT OF INDEPENDENT ACCOUNTANTS
__________________________________
To the Board of Directors and Stockholders of
Berry Petroleum Company and Exxon Corporation
We have audited the accompanying statement of revenues and direct
operating expenses of the Formax Properties for the years ended
December 31, 1994 and 1995. This statement is the responsibility of
management. Our responsibility is to express an opinion on the
statement based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the statement is free of
material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the statement. An
audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the
overall presentation of the statement. We believe that our audit
provides a reasonable basis for our opinion.
The accompanying statement reflects the revenues and direct operating
expenses of the Formax Properties as described in Note 1 and was
prepared as described in Note 2 and is not intended to be a complete
presentation of the revenues and expenses of the Formax Properties.
In our opinion, the statement audited by us presents fairly, in all
material respects, the revenues and direct operating expenses of the
Formax Properties on the basis as described in Note 2 to the statement
for the years ended December 31, 1994 and 1995.
PRICE WATERHOUSE LLP
Houston, Texas
February 10, 1997
5
THE FORMAX PROPERTIES
_____________________
STATEMENT OF REVENUES AND DIRECT OPERATING EXPENSES
___________________________________________________
(in thousands of dollars)
Year ended Nine-month period
December 31, ended September 30,
_____________ ___________________
1994 1995 1995 1996
____ ____ ____ ____
(unaudited)
Revenues:
Crude oil revenues $ 5,280 $ 5,301 $ 4,004 $ 4,401
Direct operating expenses:
Lease and plant expenses 1,258 994 788 828
Ad valorem and
Production taxes 315 570 240 468
_______ ______ _______ _______
Excess of revenues over
direct operating expenses $ 3,707 $ 3,737 $ 2,976 $ 3,105
======= ======= ======= =======
The accompanying notes are an integral part of this statement
6
THE FORMAX PROPERTIES
______________________
NOTES TO THE STATEMENT OF REVENUES
AND DIRECT OPERATING EXPENSES
_____________________________
NOTE 1 - THE PROPERTIES:
_______________________
On December 13, 1996, Berry Petroleum Company (the Company) purchased
the outstanding stock of San Joaquin Production Company (SJPC), a
wholly-owned subsidiary of Exxon Corporation (Exxon) for an aggregate
consideration of approximately $49.5 million. The consideration was
paid from the Company's existing working capital and borrowing from the
Company's unsecured credit facility with NationsBank of Texas. At the
time of purchase, the primary asset of SJPC was 100% of the stock of
Formax Oil Company (Formax). Formax's only assets were oil producing
properties located in the Midway-Sunset Field (the "Formax
Properties") adjacent to the Company's core producing properties.
NOTE 2 - BASIS OF PRESENTATION:
______________________________
Historical financial statements reflecting financial position, results
of operations and cash flows required by generally accepted accounting
principles have not been presented for the Formax Properties purchased
by the Company. Accordingly, historical summaries are presented in
lieu of the financial statements required under Rule 3-05 of Securities
and Exchange Commission Regulations S-X. The accompanying historical
summaries include the revenues and direct operating expenses
attributable to the production and sale of hydrocarbons produced from
the Formax Properties for the years ended December 31, 1994 and 1995
and the nine month periods ended September 30, 1995 and 1996.
Depreciation, depletion and amortization, interest expense, income
tax expense, land, legal, accounting, marketing and other general and
administrative expenses are excluded from the presentation.
The revenues and direct operating expenses of the Formax Properties
for the nine-month periods ended September 30, 1995 and 1996 presented
in the Statement have not been audited by independent accountants;
however, in the opinion of management, the amounts present fairly the
revenues and direct operating expenses of the Formax Properties for
the nine-month periods ended September 30, 1995 and 1996.
The preparation of the historical summaries of revenues and direct
operating expenses require management to make estimates and
assumptions that affect the reported amounts of revenues and direct
operating expenses during the reporting period. Actual results could
differ from those estimates.
7
NOTE 3 - RELATED PARTY TRANSACTION:
__________________________________
All oil production from the Formax Properties was sold to the
downstream operations of Exxon during the periods presented.
NOTE 4 - SUPPLEMENTAL OIL AND GAS INFORMATION (unaudited):
_________________________________________________________
The following estimates of proved reserves, all located in Kern
County, California, represent interests in the Formax Properties
purchased by the Company from SJPC. Proved reserves represent
estimated quantities of crude oil which geological and engineering
data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and
operating conditions. Proved developed oil and gas reserves are
the quantities expected to be recovered through existing wells with
existing equipment and operating methods. Proved undeveloped oil and
gas reserves are expected to be recovered from new wells on undrilled
acreage, or from existing wells for which relatively major
expenditures are required for completion.
All of the reserves of the Formax Properties are crude oil reserves
and the estimates which follow are based on estimates prepared by the
Company's in-house engineering staff as of December 31, 1996. The
1994, 1995 and 1996 production, sales and the associated operating
costs were added back to the estimates, as appropriate, for
presentation of December 31, 1993, 1994 and 1995 reserve estimates.
Changes in estimated reserve quantities
_______________________________________
The net interest in estimated quantities of proved developed and
undeveloped reserves of crude oil at December 31, 1993, 1994 and 1995,
and changes in quantities during each of the years then ended were as
follows (in thousands of barrels)(unaudited):
As of and for
the year ended
December 31,
______________
1994 1995
____ ____
Proved developed and undeveloped reserves:
Beginning of year 20,885 20,396
Less: production (489) (404)
______ ______
End of period 20,396 19,992
====== ======
Proved developed reserves:
Beginning of year 7,858 7,369
______ _____
End of period 7,369 6,965
====== =====
8
The information presented with respect to estimated future net revenues
and cash flows and the present value thereof is not intended to
represent the fair value of oil reserves. Actual future sales prices
and production and development costs may vary significantly from those
in effect at December 31, 1993, 1994 and 1995 and actual future
production may not occur in the periods or amounts projected. This
information is presented to allow a reasonable comparison of reserve
values prepared using standardized measurement criteria and should be
used only for that purpose.
Standardized measure of discounted future net cash flows from estimated
______________________________________________________________________
production of proved oil and gas reserves (in thousands of
__________________________________________________________
dollars)(unaudited):
__________________
The standardized measure before income taxes has been prepared based
upon the year-end sales prices of $8.25, $12.49 and $13.36 at December
31, 1993, 1994 and 1995, respectively, at a ten percent annual discount
rate. No deduction has been made for depletion, depreciation or any
indirect costs such as general corporate overhead or interest expense.
Future income tax estimates were not included as the historical basis
of the Formax properties is not relevant.
Year ended
December 31,
_______________
1994 1995
____ ____
Future cash inflows $ 254,493 $267,027
Future production and development costs 87,872 86,470
________ ________
Future net cash flows 166,621 180,557
10% annual discount for estimated timing of
cash flows 103,216 107,543
________ ________
Standardized measure of discounted future net
cash flows $ 63,405 $ 73,014
======== ========
Changes in standardized measure of discounted future net cash flows
from proved oil and gas reserves (in thousands of dollars)(unaudited):
Year ended
December 31,
______________
1994 1995
____ ____
Standardized measure before income taxes -
beginning of year $ 30,286 $ 63,405
Sales of oil produced,
net of production costs (3,707) (3,737)
Accretion of discount 3,029 6,340
Net changes in prices and production costs 34,460 11,775
Timing and other (663) (4,769)
________ ________
Standardized measure before income taxes -
end of year $ 63,405 $ 73,014
======== ========
9
BERRY PETROLEUM COMPANY
_______________________
UNAUDITED PRO FORMA STATEMENT OF OPERATIONS
__________________________________________
The accompanying unaudited pro forma financial statements are presented
to reflect the purchase by Berry Petroleum Company (the "Company"), of
100% of the stock of San Joaquin Production Company (SJPC). The
primary asset of SJPC was 100% of the stock of Formax Oil Company
(Formax). Formax's only assets were producing properties located in
the Midway-Sunset Field (the "Formax Properties"). The acquisition
closed on December 13, 1996, and was effective July 1, 1996.
Historical information presented for the Formax Properties consists
of the Statement of Revenues and Direct Operating Expenses. Certain
costs, such as depreciation, depletion and amortization, interest
expenses, income tax expenses, land, legal, accounting, marketing
and other general and administrative expenses have not been presented.
Accordingly, full separate financial statements prepared in accordance
with generally accepted accounting principles have not been prepared.
The unaudited Pro Forma Statement of Operations for the year ended
December 31, 1995, and for the nine months ended September 30, 1996,
are presented as if the acquisition of the Formax Properties occurred
on January 1, 1995 and 1996, respectively. The unaudited Pro Forma
Statement of Operations is presented based on adjustments to the
historical financial statements of the Company and the Statement of
Revenues and Direct Operating Expenses of the Formax Properties and
are not necessarily indicative of future operations of the Company.
The unaudited pro forma financial statements should be read in
conjunction with the notes thereto and the Statement of Revenues
and Direct Operating Expenses of the Formax Properties included
herein. In addition, reference should be made to the financial
statements of the Company included in Form 10K for the year ended
December 31, 1995, and included in Form 10-Q for the nine months
ended September 30, 1996, as filed with the Securities and Exchange
Commission.
10
BERRY PETROLEUM COMPANY
_______________________
PRO FORMA CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE YEAR ENDED DECEMBER 31, 1995
____________________________________
Unaudited Pro Forma Financial Information
_________________________________________
The following unaudited pro forma financial information sets forth on a
pro forma basis the adjustments which would have been made to the
Company's income statement for the year ended December 31, 1995 and for
the nine months ended September 30, 1996 assuming the acquisition had
occurred as of January 1, 1995 and 1996, respectively:
Historical Pro Forma
_________________ ________________________
Berry Formax Adjustments Combined
_____ ______ ___________ ________
(in thousands of dollars, except per share amounts)
Revenues:
Sales of oil and gas $ 45,773 $ 5,301 $ - $ 51,074
Interest and other
income, net 2,344 - - 2,344
Gain on sale of assets 3,073 - - 3,073
________ ________ ________ ________
51,190 5,301 - 56,491
________ ________ ________ ________
Expenses:
Operating costs 18,264 1,564 - 19,828
Depreciation,
depletion and
amortization 6,847 - 990 (1) 7,837
Exploratory dry hole
cost 2,012 - - 2,012
General and
administrative 4,578 - - 4,578
Interest expense - 3,000 (2) 3,000
________ _______ _______ ________
31,701 1,564 3,990 37,255
________ _______ _______ ________
Net income before
income taxes 19,489 3,737 (3,990) 19,236
Provision for
income taxes 7,286 - (95)(3) 7,191
________ _______ _______ ________
Net income $ 12,203 $ 3,737 $ 3,895 $ 12,045
======== ======= ======= ========
Net income per share $ .56 $ .55
======== ========
Weighted average number
of shares of capital
stock used to
calculate earnings
per share 21,932 21,932
======= ========
11
BERRY PETROLEUM COMPANY
_______________________
PRO FORMA CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996
____________________________________________
Historical Pro Forma
_________________ ________________________
Berry Formax Adjustments Combined
_____ ______ ___________ ________
(in thousands of dollars, except per share amounts)
Revenues:
Sale of oil and gas $ 38,797 $ 4,401 $ - $ 43,198
Interest and other
income, net 1,572 - - 1,572
________ ________ ________ ________
40,369 4,401 - 44,470
________ ________ ________ ________
Expenses:
Operating costs 12,308 1,296 - 13,604
Depreciation,
depletion and
amortization 5,124 - 721 (1) 5,845
General and
administrative 3,622 - - 3,622
Interest expense - - 2,250 (2) 2,250
________ _______ _______ ________
21,054 1,296 2,971 25,321
________ _______ _______ ________
Net income before
income taxes 19,315 3,105 (2,971) 19,449
Provision for
income taxes 7,044 - 50 (3) 7,094
________ _______ _______ ________
Net income $ 12,271 $ 3,105 $ 3,021 $ 12,355
======== ======= ======= ========
Net income per share $ .56 $ .56
======== ========
Weighted average number
of shares of capital
stock used to
calculate earnings
per share 21,935 21,935
======= ========
The Formax Properties are adjacent to the Company's properties
in the South Midway-Sunset field in Kern County, California.
The Company plans to implement a capital expenditure program during
1997 of $6.5 million to further develop the reserves with the drilling
of 48 new development wells, performing remedial work on a number of
existing wells and improving and integrating certain production
facilities. With this development program, it is anticipated that the
production will begin to increase over the next year and, based upon
current oil prices, result in a significant improvement in the
Company's operating results beginning in 1997.
12
BERRY PETROLEUM COMPANY
_______________________
NOTES TO PRO FORMA CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF TRANSACTION:
_________________________________________________________
The accompanying unaudited pro forma condensed statements of operations
are presented to reflect the acquisition of the Formax Properties. The
unaudited Pro Forma Statements of Operations for the year ended
December 31, 1995, and the nine months ended September 30, 1996, are
presented as if the acquisition of the Formax Properties occurred on
January 1, 1995 and 1996, respectively. The pro forma financial
statements are presented based on adjustments to the historical
financial statements of Berry Petroleum Company (the "Company") and
the Statement of Revenues and Direct Operating Expenses for the Formax
Properties, and are not necessarily indicative of future operations of
the Company.
Historical financial statements reflecting financial position, results
of operations and cash flows required by generally accepted accounting
principles have not been prepared for the Formax Properties purchased
by the Company. Accordingly, historical summaries are presented in
lieu of the financial statements required under Rule 3-05 of Securities
and Exchange Commission Regulations S-X. The accompanying historical
summaries include the revenues and direct operating expenses
attributable to the production and sale of hydrocarbons produced from
the Formax Properties for the years ended December 31, 1995 and the
nine-month period ended September 30, 1996. Depreciation, depletion
and amortization, interest expense, income tax expense, land, legal,
accounting, marketing and other general and administrative expenses
are excluded from the presentation.
The revenues and direct operating expenses of the Formax Properties
for the nine-month period ended September 30, 1996 presented in the
Statement have not been audited by independent accountants; however,
in the opinion of management, the amounts present fairly the revenues
and direct operating expenses of the Formax Properties for the
nine-month period ended September 30, 1996.
The preparation of the historical summaries of and direct operating
expenses require management to make estimates and assumptions that
affect the reported amounts of revenues and direct operating
expenses during the reporting period. Actual results could differ
from those estimates.
The aggregate purchase price paid by the Company was approximately
$49.5 million.
The purchase price was paid from the Company's existing working capital
and borrowings from the Company's unsecured credit facility with
NationsBank of Texas.
13
NOTE 2 - PRO FORMA ADJUSTMENTS (Unaudited):
__________________________________________
The unaudited Pro Forma Statement of Operations reflects the following
adjustments:
(1) To record depreciation, depletion and amortization (DD&A) based
upon the Company's basis in the Formax Properties. DD&A was
computed under units of production method in the periods
presented.
(2) To reflect loss of interest earned on working capital and
interest expense on borrowings made to fund the purchase of the
Formax Properties.
(3) To record the effect of income taxes on the income of the Formax
Properties and the pro forma adjustments, computed at the
Company's effective tax rate.
14
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant had duly caused this report to be signed on its
behalf by the undersigned hereunto duly authorized.
Date: February 21, 1997 BERRY PETROLEUM COMPANY
a Delaware corporation
/s/ Ralph J. Goehring
By: Ralph J. Goehring,
Chief Financial Officer