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): October 29, 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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1999 Broadway, Suite 3700
- Denver, CO 80202
(Address
of Principal Executive Offices)
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93309
(Zip
Code)
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Registrant’s
telephone number, including area code: (303) 999-4400
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
- 1
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Item
2.02 Results of Operations and Financial Condition
On October
29, 2008, Berry Petroleum Company issued a news release announcing its financial
and operational results for the third quarter ended September 30,
2008. These results are discussed in the news release attached hereto as Exhibit
99.1, which is incorporated by reference in its entirety.
Item 9.01
Financial
Statements and Exhibits
(d)
Exhibits
99.1 -
News Release by Berry Petroleum Company dated October 29, 2008, titled "Berry
Petroleum Earns $1.17 Per Share in Third Quarter 2008; Averages 35,150
BOE/D Production and Generates Discretionary Cash Flow of $122 Million"
announcing the Registrant's results for the third quarter
ended September 30, 2008.
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: October
29, 2008
- 2
- -
Berry
Petroleum Company News 
Berry
Petroleum Earns $1.17 Per Share in Third Quarter 2008; Averages 35,150
BOE/D Production and Generates Discretionary Cash Flow of $122 Million
Denver -- (BUSINESS WIRE) – October
29, 2008 -- Berry
Petroleum Company (NYSE:BRY) earned net
income of $53.3 million, or $1.17 per diluted share, for the three months ended
September 30, 2008, up 98% from net income of $26.9 million, or $.60 per diluted
share in the third quarter of 2007, according to Robert F. Heinemann, president
and chief executive officer. Discretionary cash flow totaled $122
million in the quarter, up 70% from $72 million in the third quarter of 2007.
(Discretionary cash flow is a non-GAAP measure; see reconciliation
below.)
For the
third quarter ended September 30, 2008 net production averaged 35,150 barrels of
oil equivalent per day (BOE/D), an increase of 31% from the 26,873 BOE/D
achieved in the same 2007 period. The average realized sales price, net of
hedging, for the 2008 third quarter was $64.98 per BOE, up 36% over the $47.93
per BOE received in the 2007 period. Oil and gas revenues rose 75% to
$208 million in 2008 compared to $119 million in 2007. The Company drilled 118
gross (101 net) wells in the third quarter of 2008.
For 2008
and 2007, net production in BOE per day was as follows:
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Third
Quarter Ended September 30
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2008 Production
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2007 Production
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Oil
(Bbls)
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21,162 | 60 | % | 19,481 | 73 | % | ||||||||||
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Natural
Gas (BOE)
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13,988 | 40 | % | 7,392 | 27 | % | ||||||||||
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Total
BOE per day
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35,150 | 100 | % | 26,873 | 100 | % | ||||||||||
Mr.
Heinemann said, “Our assets are performing as expected. Company-wide
production for the quarter was up 21% over the second quarter 2008 with the
contribution of our East Texas acquisition and significant growth in our
diatomite and Piceance assets.”
Production
from the Company’s diatomite asset increased to an average of 2,100 BOE/D, up
400 BOE/D or 24% from the second quarter of 2008. The diatomite 2008 drilling
program was completed in mid-October, with an additional 50 wells slated for
2009. Production should remain flat during the fourth quarter as the
Company evaluates steam injection methods on the shallower reservoir in the
northern portion of the field.
Piceance
production was up 37% over the second quarter of 2008 to 22.7 MMcf/D from 26
gross wells (16 net) drilled in the third quarter. Approximately 2
MMcf/D was shut-in during September while the Rockies Express pipeline was down
for maintenance. The East Texas natural gas acquisition has been contributing
5,000 BOE/D since the closing on July 15, 2008 and added 4,300 BOE/D to Berry’s
average production for the quarter.
In light
of the current commodity price environment Berry has reduced capital activity in
the fourth quarter of 2008, by releasing eight of the 12 rigs we had drilling in
the third quarter of 2008. As a result, we expect fourth quarter production to
average between 37,000 and 38,000 BOE/D and remain flat into the first quarter
of 2009. At current commodity prices, capital activity in 2009 will be at a
reduced level compared to 2008. In 2009 capital expenditures of
approximately $200 million would allow the Company to maintain production while
generating free cash flow to pay down debt. The Company has the flexibility to
further reduce its capital spending at lower commodity price
levels.
Nine Months
Results
Net
income for the first nine months of 2008 was $145.5 million or $3.20 per diluted
share, up 49% from $97.7 million or $2.18 per diluted share in the comparable
2007 period.
Revenues
for the nine months of 2008 were $642 million, up 49% from $430 million in the
same 2007 period. Discretionary cash flow totaled $332 million for the first
nine months of 2008, up 85% from $179 million in the comparable 2007
period.
For the
nine months ended September 30, 2008, net production averaged 30,755 BOE/D, an
increase of 16% from the 26,525 BOE/D achieved in the same period in 2007. The
average realized sales price per BOE, net of hedging, for the nine months ended
September 30, 2008 was $66.37 per BOE, up 45% from the $45.82 per BOE received
in the 2007 period.
(more)
1
Berry
Petroleum Company - News Release - October 29, 2008
Financial
Performance
David
Wolf, executive vice president and chief financial officer, stated, “Our
earnings for the quarter were solid at $53 million. Our operating costs
decreased on a per barrel basis as we integrated the lower cost East Texas
assets into our base assets. Fuel costs to generate steam decreased
approximately $3 million as natural gas prices softened by 18% while our fuel
consumption increased by 7%. Our G&A increased during the quarter as we
relocated personnel to our corporate headquarters in Denver. Our outstanding
debt at the end of the third quarter 2008 was $1.13 billion, comprised of $200
million in senior subordinated debt, $910 million from our credit facility and
$19 million from our line of credit.
“On
October 17 we completed an amendment to our $1.5 billion credit facility that
increased our borrowing base to $1.25 billion with bank commitments of $1.08
billion. This increase in our borrowing base confirms the value of Berry’s
predictable, long-lived reserves and as of October 27, 2008, provides us with
$144 million in liquidity. Our ability to generate free cash flow at lower
commodity prices provides us with confidence in a volatile commodity and credit
environment.”
Explanation
and Reconciliation of Non-GAAP Financial Measures
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Three
Months Ended
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Nine
Months Ended
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09/30/08
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09/30/07
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09/30/08
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09/30/07
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Net
cash provided by operating activities
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$ 137.4
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$ 93.6
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331.2
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$
181.5
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Add
back: Net increase in current assets
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6.1
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5.7
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35.4
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10.8
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Add
back: Net decrease (increase) in current liabilities
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(21.6)
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(27.7)
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(34.5)
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(13.1)
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Discretionary
cash flow
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$ 121.9
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$ 71.6
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332.1
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$
179.2
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Teleconference
Call
An
earnings conference call will be held Wednesday, October 29, 2008 at 1:30 p.m.
Eastern Time (11:30 a.m. Mountain Time). Dial
1-866-831-6272 to participate, using passcode 33252082. International
callers may dial 617-213-8859. For a digital replay available until
November 12, 2008 dial 1-888-286-8010 (passcode 81667090). Listen live or via
replay on the web at http://www.bry.com.
Transcripts of this and previous calls may be viewed at www.bry.com in the
“Investor Center.”
About
Berry Petroleum Company
Berry
Petroleum Company is a publicly traded independent oil and gas production and
exploitation company with operations in California, Utah, Colorado and
Texas.
The
Company uses its web site as a channel of distribution of material company
information. Financial and other material information
regarding the Company is routinely posted on and accessible
at http://www.bry.com/index.php?page=investor
Safe
harbor under the “Private Securities Litigation Reform Act of 1995”
Any
statements in this news release that are not historical facts are
forward-looking statements that involve risks and uncertainties. Words such as
"would," "will," "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 2007 Form 10-K filed with the
Securities and Exchange Commission on February 26, 2008 under 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. All material changes are updated in Part II, Item 1A within
our Form 10-Qs filed subsequent to that date and specifically in the Form 10-Q
for the period ending September 30, 2008 filed on October 29,
2008."
(more)
2
Berry
Petroleum Company - News Release - October 29, 2008
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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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Nine Months
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09/30/08
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09/30/07
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09/30/08
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09/30/07
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Revenues
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Sales
of oil and gas
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$ | 207,863 | $ | 118,733 | $ | 557,689 | $ | 333,933 | ||||||||
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Sales
of electricity
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18,317 | 12,241 | 51,223 | 40,704 | ||||||||||||
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Gas
marketing
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13,284 | - | 28,046 | - | ||||||||||||
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Gain
on sale of assets
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95 | 1,418 | 510 | 51,816 | ||||||||||||
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Interest and other, net
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1,202 | 1,108 | 4,095 | 3,754 | ||||||||||||
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Total
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240,761 | 133,500 | 641,563 | 430,207 | ||||||||||||
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Expenses
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Operating
costs – oil &
gas
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56,038 | 33,995 | 152,852 | 103,330 | ||||||||||||
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Operating
costs – electricity
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13,706 | 9,760 | 45,620 | 35,014 | ||||||||||||
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Production
taxes
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9,673 | 4,344 | 23,121 | 12,297 | ||||||||||||
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Depreciation,
depletion & amortization - oil & gas
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40,440 | 23,356 | 96,588 | 65,478 | ||||||||||||
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Depreciation,
depletion & amortization - electricity
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646 | 938 | 1,991 | 2,661 | ||||||||||||
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Gas
marketing
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12,034 | - | 26,087 | - | ||||||||||||
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General
and
administrative
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14,524 | 9,333 | 37,067 | 29,291 | ||||||||||||
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Interest
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8,755 | 4,326 | 16,444 | 13,593 | ||||||||||||
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Commodity
derivatives
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(594 | ) | - | 172 | - | |||||||||||
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Dry
hole, abandonment, impairment & exploration
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1,571 | 5,175 | 9,162 | 9,342 | ||||||||||||
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Total
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156,793 | 91,227 | 409,104 | 271,006 | ||||||||||||
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Income
before income
taxes
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83,968 | 42,273 | 232,459 | 159,201 | ||||||||||||
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Provision
for income
taxes
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30,620 | 15,418 | 86,939 | 61,534 | ||||||||||||
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Net
income
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$ | 53,348 | $ | 26,855 | $ | 145,520 | $ | 97,667 | ||||||||
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Basic
net income per
share
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$ | 1.20 | $ | .61 | $ | 3.27 | $ | 2.22 | ||||||||
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Diluted
net income per
share
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$ | 1.17 | $ | .60 | $ | 3.20 | $ | 2.18 | ||||||||
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Cash
dividends per
share
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$ | 0.075 | $ | 0.075 | $ | 0.225 | $ | 0.225 | ||||||||
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Weighted
average common shares:
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Basic
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44,527 | 44,112 | 44,466 | 44,020 | ||||||||||||
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Diluted
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45,541 | 45,002 | 45,506 | 44,836 | ||||||||||||
(more)
3
Berry
Petroleum Company - News Release - October 29, 2008
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CONDENSED
BALANCE SHEETS
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(In
thousands)
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(unaudited)
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09/30/08
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12/31/07
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Assets
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Current
assets
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$ | 206,442 | $ | 161,019 | ||||
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Property,
buildings & equipment, net
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2,196,322 | 1,275,091 | ||||||
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Other
assets
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17,307 | 15,996 | ||||||
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Liabilities
& Shareholders’ Equity
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Current
liabilities
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$ | 353,920 | $ | 271,369 | ||||
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Deferred
taxes
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206,848 | 128,824 | ||||||
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Long-term
debt
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1,109,300 | 445,000 | ||||||
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Other
long-term liabilities
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153,099 | 146,939 | ||||||
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Shareholders’
equity
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596,904 | 459,974 | ||||||
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$ | 2,420,071 | $ | 1,452,106 | ||||
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CONDENSED
STATEMENTS OF CASH FLOWS
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(In
thousands)
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(unaudited)
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Nine
Months
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09/30/08
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09/30/07
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Cash
flows from operating activities:
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Net
income
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$ | 145,520 | $ | 97,667 | ||||
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Depreciation,
depletion & amortization (DD&A)
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98,579 | 68,139 | ||||||
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Dry
hole & impairment
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6,858 | 8,725 | ||||||
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Commodity
derivatives
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(180 | ) | 804 | |||||
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Stock
based compensation
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6,653 | 5,437 | ||||||
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Deferred
income taxes
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76,502 | 53,162 | ||||||
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Gain
on sale of asset
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(510 | ) | (51,816 | ) | ||||
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Other,
net
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(2,174 | ) | (574 | ) | ||||
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Net
cash provided by operating activities
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331,248 | 181,544 | ||||||
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Net
cash used in investing activities
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(986,865 | ) | (210,079 | ) | ||||
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Net
cash provided by financing activities
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655,360 | 28,310 | ||||||
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Net
decrease in cash and cash equivalents
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(257 | ) | (225 | ) | ||||
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Cash
and cash equivalents at beginning of year
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316 | 416 | ||||||
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Cash
and cash equivalents at end of period
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$ | 59 | $ | 191 | ||||
(more)
4
Berry
Petroleum Company - News Release - October 29, 2008
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COMPARATIVE
OPERATING STATISTICS
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(unaudited)
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Three
Months
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Nine
Months
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09/30/08
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09/30/07
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Change
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09/30/08
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09/30/07
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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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35,150 | 26,873 | +31 | % | 30,755 | 26,525 | +16 | % | ||||||||||||||||
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Per
BOE:
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Average
sales price before hedges
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$ | 80.22 | $ | 49.35 | +63 | % | $ | 82.57 | $ | 45.98 | +80 | % | ||||||||||||
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Average
sales price after hedges
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64.98 | 47.93 | +36 | % | 66.37 | 45.82 | +45 | % | ||||||||||||||||
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Operating
costs - oil and gas
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17.33 | 13.75 | +26 | % | 18.14 | 14.27 | +27 | % | ||||||||||||||||
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Production
taxes
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2.99 | 1.76 | +70 | % | 2.74 | 1.70 | +61 | % | ||||||||||||||||
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Total
operating costs
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20.32 | 15.51 | + 31 | % | 20.88 | 15.97 | + 31 | % | ||||||||||||||||
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DD&A -
oil and
gas
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12.51 | 9.45 | +32 | % | 11.46 | 9.04 | +27 | % | ||||||||||||||||
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General
& administrative expenses
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4.49 | 3.78 | +19 | % | 4.40 | 4.05 | +9 | % | ||||||||||||||||
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Interest
expense
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$ | 2.71 | $ | 1.75 | +55 | % | $ | 1.95 | $ | 1.88 | +4 | % | ||||||||||||
# #
#
Contact:
Berry
Petroleum
Company
Investors and Media
1999
Broadway, Suite
3700 David
Wolf , 1-303-999-4 4 00
Denver,
Colorado
80202
Todd Crabtree, 1-866-472-8279
Internet:
www.bry.com
SOURCE: Berry Petroleum Company