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): April 30, 2009
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, COLORADO
(Address
of Principal Executive Offices)
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80202
(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 April
30, 2009, Berry Petroleum Company issued a news release announcing its financial
and operational results for the first quarter ended March 31, 2009.
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 March 31, 2009, titled "Berry
Petroleum Earns $.77 Per Share in First Quarter 2009; Quarterly Production
Averages 33,330 BOE/D" announcing the Registrant's results for the first
quarter ended March 31, 2009.
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: April
30, 2009
- 2
- -
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Berry Petroleum Company News
Berry
Petroleum Company
1999 Broadway, Suite
3700
Denver, CO
80202
303-999-4400
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Contacts:
David Wolf 303-999-4400 Todd Crabtree
866-472-8279
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Berry
Petroleum Earns $0.77 Per Share in First Quarter 2009; Quarterly Production
Averages 33,330 BOE/D
Borrowing
Base - $1,050 Million; $140 Million Second Lien Closes
Denver -- (BUSINESS WIRE) – April 30,
2009 -- Berry Petroleum Company (NYSE:BRY) earned net
income of $35 million, or $0.77 per diluted share, for the three months ended
March 31, 2009, down 19% from net income of $43 million, or $0.94 per diluted
share in the first quarter of 2008, according to Robert F. Heinemann, president
and chief executive officer. Discretionary cash flow totaled $81 million in the
first quarter of 2009 compared to $97 million in the first quarter of 2008.
(Discretionary cash flow is a non-GAAP measure; see reconciliation
below.)
The
reported net income includes items that affect year-on-year comparisons
including an impairment to the value of the Denver-Julesburg (DJ) basin asset
held for sale at the end of the first quarter, a gain on the termination of
associated DJ basin gas hedges and a gain on ineffective hedges related to new
California crude sales contracts secured by the Company in the first quarter of
2009. In total, for the first quarter of 2009, these items increased net income
by approximately $17.9 million or $0.39 per diluted share for an adjusted first
quarter net income of $17.1 million or $0.38 per diluted share, compared to an
adjusted $0.86 per diluted share in the first quarter of 2008.
For the
first quarter ended March 31, 2009 net production averaged 33,330 barrels of oil
equivalent per day (BOE/D), an increase of 19% from the 28,070 BOE/D achieved in
the same 2008 period and down 6% from an average of 35,580 BOE/D in the fourth
quarter of 2008. The Company drilled 26 wells in the first quarter of 2009.
Company-wide production is expected to average approximately 30,000 BOE/D for
the full year with no future contributions from the DJ assets, which averaged
approximately 3,100 BOED in the first quarter of 2009.
For the
first quarters of 2009 and 2008, net production in BOE per day was as
follows:
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First
Quarter Ended March 31
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2009
Production
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2008
Production
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Oil
(Bbls)
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19,500
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59%
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19,890
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71%
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Natural
Gas (BOE)
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13,830
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41%
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8,180
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29%
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Total
BOE per day
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33,330
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100%
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28,070
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100%
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Mr.
Heinemann continued, “The first four months of 2009 have been an important
period of time for Berry Petroleum. We continue to take the
appropriate steps to manage our Company in the current commodity and financial
environment. Berry remains focused on reducing costs, marketing our California
crude oil, and investing capital in our highest return projects while generating
excess cash flow to reduce debt. Consistent with this approach, the Company
completed the sale of the DJ basin asset in April. We continue to monitor
the heavy oil differential, which has narrowed this year from $14/Bbl to around
$6/Bbl less than WTI. Until the demand for crude firms we expect oil
prices and the differential to be volatile.
“We have
significantly improved the Company’s financial flexibility by confirming our
borrowing base under our senior secured credit facility at $1.05 billion before
the effect of adding a second lien credit facility of $140
million. Our liquidity now stands at $275 million which is
approximately twice the level we had six months ago.”
In the
first quarter of 2009, the Company entered into an agreement to sell its mature,
non-core assets in the DJ basin for $154 million and the sale became effective
on April 1, 2009. This transaction represented essentially all the Company’s
properties in Northeastern Colorado. Included in the sale were
natural gas reserves, mid-stream assets and an associated gas hedge valued at
$14 million.
In March
2009, the Company terminated its Big West of California crude oil purchase
contract and entered into short-term sales contracts for our California crude
oil ranging from one to nine months with approximately 70% of our California
crude now under contract until September 2009.
Borrowing Base
Re-determination, Second Lien Closing
In its
April re-determination, the Company’s borrowing base was set at $1.05 billion
which includes a reduction of $100 million related to the sale of the Company’s
DJ basin gas assets, which was effective April 1, 2009. Covenants and
interest rate margins on the Senior Secured credit facility were
unchanged.
1
Berry
Petroleum Company - Results for the First Quarter Ended
03/31/2009
In
addition, on April 27, 2009 the Company closed a $140 million Second Lien Credit
Agreement that matures on January 16, 2013. Interest on the facility is
charged at LIBOR plus a margin of eight percent with a minimum LIBOR rate of
three percent. Covenants under the facility are similar to but slightly
less restrictive than the Senior Secured credit facility. Proceeds from
the Second Lien facility were used to pay down borrowings under the Senior
Secured credit facility. At April 27, 2009, following the closing of the
Second Lien credit facility, the outstanding amount under our Senior Secured
credit facility was approximately $735 million providing us with approximately
$275 million of liquidity. We expect an additional $60 million in debt
repayment during the balance of 2009.
David
Wolf, executive vice president and chief financial officer, stated, “The Second
Lien facility provides Berry a security at an attractive interest rate in this
market, a five year maturity, no prepayment penalties and no call provision or
amortization. Berry’s asset coverage test of 1.5 times was
set in a low commodity price environment and our asset coverage is
currently at 2.6 times. Berry’s estimated weighted average cost of debt remains
very attractive at 5% for 2009.”
Operational
Update
The
Company continues to be focused on delivering cost reductions across all its
producing areas and maximizing production from its existing assets. The focus at
California’s S. Midway assets for 2009 remains on improving steam-oil ratios and
lowering operating expenses. Eight of 10 planned horizontal wells have been
drilled and S. Midway production averaged 11,330 BOE/D for the first quarter. N.
Midway diatomite production averaged 2,670 BOE/D in the first quarter and an
additional 44 diatomite wells are planned for 2009 as well as installation of
additional steam generation facilities. East Texas first quarter production
averaged 30 MMcf/D with a one-rig program, and three vertical wells were drilled
in the Oakes field during the quarter. The fourth of five planned
vertical Oakes wells for 2009 is drilling and after completion of drilling in
the Oakes field, we expect to begin drilling in the Darco Field with our first
horizontal Haynesville well.
Financial Performance
(excluding discontinued
operations)
Sales
from oil and gas were $128 million in the first quarter of 2009 compared to $152
million in the same 2008 period. First quarter 2009 oil revenues were $98
million, or lower by 25% than the same 2008 period due primarily to declining
oil prices (see comparative operating statistics table), and gas revenues were
$30 million, up 43% on increased volume from the East Texas assets acquired in
mid-2008. Operating costs were lower in the first quarter primarily due to
lower natural gas prices which reduces our cost of steam in our California
operations. Operating costs for the 2009 and 2008 periods ending March 31 and
our anticipated ranges for the full-year 2009 are shown in the following
table.
Operating
Costs (excluding discontinued operations)
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Anticipated
range
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Full-year
2009 per BOE
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3
mo. ended 03/31/09
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3
mo. ended 03/31/08
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Operating
costs-oil and gas production
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$
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$13.50
- 15.00
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$
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13.74
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$
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17.36
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Production
taxes
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1.50
- 2.50
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2.08
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2.29
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DD&A
– oil and gas production (1)
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13.50
- 14.50
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13.38
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10.68
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G&A
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4.25
- 4.75
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4.89
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4.91
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Interest
expense
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4.00
- 4.70
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3.69
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1.47
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Total
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$
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$36.75
– 41.50
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$
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37.78
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$
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36.71
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(1)
Full-year estimate includes both oil & gas and electricity
Explanation
and Reconciliation of Non-GAAP Financial Measures
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Three
Months Ended
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03/31/09
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03/31/08
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Net
cash provided by operating activities
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$ | 8.1 | $ | 87.2 | ||||
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Add
back: Net increase in current assets
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12.9 | .1 | ||||||
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Add
back: Net decrease in current liabilities
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60.3 | 9.8 | ||||||
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Discretionary
cash flow
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$ | 81.3 | $ | 97.1 | ||||
Teleconference
Call
An
earnings conference call will be held Thursday, April 30, 2008 at 1:30 p.m.
Eastern Time (11:30 a.m. Mountain Time). Dial
1-866-202-1971 to participate, using passcode
10486818. International callers may dial 617-213-8842. For
a digital replay available until May 6, 2009 dial 1-888-286-8010 (passcode
24420355). 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
"expect," "planned," 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 2008 Form 10-K filed with the Securities and
Exchange Commission on February 25, 2009 under the heading "Other Factors
Affecting the Company's Business and Financial Results."
2
Berry
Petroleum Company - Results for the First Quarter Ended
03/31/2009
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CONDENSED
STATEMENTS OF INCOME (continuing operations)
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(In
thousands)
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(unaudited)
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Three Months
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03/31/09
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03/31/08
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Revenues
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Sales
of oil and gas
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$ | 127,869 | $ | 151,666 | ||||
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Sales
of electricity
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10,270 | 15,927 | ||||||
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Gas
marketing
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7,581 | 3,231 | ||||||
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Gain
on hedge termination
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14,270 | - | ||||||
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Gain
(loss) on commodity derivatives
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22,894 | (708 | ) | |||||
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Interest
and other income, net
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283 | 830 | ||||||
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Total
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183,167 | 170,946 | ||||||
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Expenses
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Operating
costs – oil &
gas
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37,384 | 39,340 | ||||||
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Operating
costs – electricity
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8,783 | 16,399 | ||||||
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Production
taxes
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5,652 | 5,183 | ||||||
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Depreciation,
depletion & amortization - oil & gas
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36,398 | 24,207 | ||||||
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Depreciation,
depletion & amortization - electricity
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959 | 693 | ||||||
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Gas
marketing
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7,284 | 2,982 | ||||||
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General
and
administrative
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13,294 | 11,132 | ||||||
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Interest
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10,050 | 3,327 | ||||||
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Dry
hole, abandonment, impairment & exploration
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122 | 2,728 | ||||||
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Total
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119,926 | 105,991 | ||||||
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Income
before income
taxes
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63,241 | 64,955 | ||||||
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Provision
for income
taxes
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21,462 | 25,419 | ||||||
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Income
from continuing operations
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41,779 | 39,536 | ||||||
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(Loss)
income from discontinued operations, net
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(6,781 | ) | 3,495 | |||||
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Net
income
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$ | 34,998 | $ | 43,031 | ||||
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Basic
net income from continuing operations per
share
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$ | 0.92 | $ | 0.88 | ||||
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Basic
net (loss) income from discontinued operations per common
share
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$ | (0.15 | ) | $ | 0.08 | |||
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Basic
net income per common share
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$ | 0.77 | $ | 0.96 | ||||
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Diluted
net income from continuing operations per
share
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$ | 0.92 | $ | 0.86 | ||||
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Diluted
net (loss) income from discontinued operations per common
share
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$ | (0.15 | ) | $ | 0.08 | |||
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Diluted
net income per common share
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$ | 0.77 | $ | 0.94 | ||||
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Cash
dividends per
share
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$ | 0.075 | $ | 0.075 | ||||
3
Berry
Petroleum Company - Results for the First Quarter Ended
03/31/2009
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CONDENSED
BALANCE SHEETS
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(In
thousands)
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(unaudited)
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03/31/09
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12/31/08
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Assets
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Current
assets
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$ | 319,746 | $ | 189,080 | ||||
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Property,
buildings & equipment, net
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2,096,593 | 2,254,425 | ||||||
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Fair
value of derivatives
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48,641 | 79,696 | ||||||
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Other
assets
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27,649 | 19,182 | ||||||
| $ | 2,492,629 | $ | 2,542,383 | |||||
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Liabilities
& Shareholders’ Equity
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Current
liabilities
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$ | 151,055 | $ | 260,625 | ||||
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Deferred
taxes
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272,351 | 270,323 | ||||||
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Long-term
debt
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1,199,400 | 1,131,800 | ||||||
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Other
long-term liabilities
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44,940 | 47,888 | ||||||
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Fair
value of derivatives
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12,324 | 4,203 | ||||||
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Shareholders’
equity
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812,559 | 827,544 | ||||||
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$ | 2,492,629 | $ | 2,542,383 | ||||
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CONDENSED
STATEMENTS OF CASH FLOWS
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(In
thousands)
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(unaudited)
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Three
Months
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03/31/09
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03/31/08
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Cash
flows from operating activities:
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Net
income
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$ | 34,998 | $ | 43,031 | ||||
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Depreciation,
depletion & amortization (DD&A)
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39,545 | 27,769 | ||||||
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Dry
hole & impairment
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9,643 | 2,728 | ||||||
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Commodity
derivatives
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(22,842 | ) | 271 | |||||
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Stock
based compensation
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2,988 | 2,107 | ||||||
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Deferred
income taxes
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21,059 | 22,082 | ||||||
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Gain
on sale of asset
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- | (415 | ) | |||||
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Other,
net
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(3,952 | ) | 491 | |||||
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Net
changes in operating assets and liabilities
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(73,310 | ) | (10,829 | ) | ||||
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Net
cash provided by operating activities
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8,129 | 87,235 | ||||||
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Net
cash used in investing activities
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(42,666 | ) | (79,715 | ) | ||||
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Net
cash provided by financing activities
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34,346 | (5,157 | ) | |||||
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Net
decrease in cash and cash equivalents
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(191 | ) | 2,363 | |||||
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Cash
and cash equivalents at beginning of year
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240 | 316 | ||||||
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Cash
and cash equivalents at end of period
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$ | 49 | $ | 2,679 | ||||
4
Berry
Petroleum Company - Results for the First Quarter Ended
03/31/2009
COMPARATIVE
OPERATING STATISTICS
(Unaudited)
Three
Months
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March
31, 2009
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%
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March
31, 2008
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%
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December
31, 2008
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%
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Heavy
Oil Production (Bbl/D)
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16,436
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50
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16,375
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58
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15,999
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45
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Light
Oil Production (Bbl/D)
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3,066
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9
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3,510
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13
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3,659
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10
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Total
Oil Production (Bbl/D)
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19,502
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59
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19,885
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71
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19,658
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55
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Natural
Gas Production (Mcf/D)
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82,979
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41
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49,086
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29
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95,548
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45
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Total
operations (BOE/D)
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33,332
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100
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28,066
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100
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35,583
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100
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DJ
Basin Production (BOE/D)
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3,101
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3,157
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3,415
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Production
- Continuing Operations (BOE/D)
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30,231
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24,909
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32,168
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Oil
and gas BOE for continuing operations:
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Average
sales price before hedging
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$
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29.36
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$
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75.11
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$
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40.61
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Average
sales price after hedging
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47.11
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62.44
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45.57
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Oil,
per Bbl, for continuing operations:
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Average
WTI price
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$
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43.24
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$
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97.82
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$
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59.08
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Price
sensitive royalties
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(1.02
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)
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(4.47
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)
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(1.69
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)
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Quality
differential and other
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(9.53
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)
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(10.78
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)
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(8.55
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)
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Crude
oil hedges
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23.79
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(15.60
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)
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4.69
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Correction
to royalties payable
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-
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5.85
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-
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Average
oil sales price after hedging
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$
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56.48
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$
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72.82
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$
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53.53
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Natural
gas price for continuing operations:
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Average
Henry Hub price per MMBtu
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$
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4.90
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$
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8.74
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$
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6.95
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Conversion
to Mcf
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0.25
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0.44
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0.35
|
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Natural
gas hedges
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1.14
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(0.19
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)
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0.89
|
|||||||||
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Location,
quality differentials and other
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(1.27
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)
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(1.56
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)
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(2.67
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)
|
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Average
gas sales price after hedging per Mcf
|
$
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5.02
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$
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7.43
|
$
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5.52
|
# #
#
5