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 30, 2009
BERRY PETROLEUM COMPANY
(Exact Name of Registrant as Specified in its Charter)
|
DELAWARE
(State or Other Jurisdiction of
Incorporation or Organization) |
1-9735
(Commission File Number) |
77-0079387
(IRS Employer
Identification Number) |
|
1999 BROADWAY, SUITE 3700, DENVER, COLORADO
(Address of Principal Executive Offices) |
80202
(Zip Code) |
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 -
Item 2.02 Results of Operations and Financial Condition
On October 30, 2009, Berry Petroleum Company issued a news release announcing its financial and operational results for the third quarter ended September 30, 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 October 30, 2009, titled "Berry Petroleum Announces Results for Third Quarter of 2009" announcing the Registrant's results for the third quarter ended September 30, 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: |
/s/ Kenneth A. Olson |
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Kenneth A. Olson |
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Corporate Secretary |
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Date: October 30, 2009
- 2 -
Berry Petroleum Company News Page 1
of 6Berry Petroleum Announces Results for Third Quarter of 2009
Denver -- (BUSINESS WIRE) – October 30, 2009 -- Berry Petroleum Company (NYSE:BRY) reported net income of $19 million, or $0.41 per diluted share, for the
third quarter of 2009, compared to net income of $53.3 million, or $1.16 per diluted share for the third quarter of 2008, according to Robert F. Heinemann, president and chief executive officer. Discretionary cash flow for the third quarter totaled $60 million. (Discretionary cash flow is a non-GAAP measure; see reconciliation below.)
Items that affected net income for the quarter included a non-cash gain on hedges, the write-off of certain costs related to the Company’s credit facility, a net gain on asset sales, and inventoried volumes from Poso Creek that were sold in the third quarter. In total, for the third quarter of 2009, these items increased net income
by approximately $3.3 million, or $0.07 per diluted share for an adjusted third quarter net income of $15.7 million, or $0.34 per diluted share.
For the third quarters of 2009 and 2008, average net production in BOE per day was as follows:
|
Third Quarter Ended September 30 |
||||||||||||||||
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2009 Production |
2008 Production |
|||||||||||||||
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Oil (Bbls) |
19,310 | 68 | % | 21,162 | 60 | % | ||||||||||
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Natural Gas (BOE) |
9,107 | 32 | % | 13,988 | 40 | % | ||||||||||
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Total BOE per day |
28,417 | 100 | % | 35,150 | 100 | % | ||||||||||
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DJ Basin Production (BOE/D) |
- | 3,337 | ||||||||||||||
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Production – Continuing Operations (BOE/D) |
28,417 | 31,813 | ||||||||||||||
Mr. Heinemann said, “Production averaged 28,400 BOE/D for the third quarter of 2009 generating discretionary cash flow of $60 million with a total of only $22 million of capital expenditures. Strong cash flow along with the completion of our East Texas midstream sale allowed us to repay $78 million of debt during the quarter. With
our $938 million borrowing base reconfirmed during October, our liquidity today is approximately $550 million. As we complete our 2009 program, we are also preparing for an increased level of activity in 2010. In the Diatomite we are installing additional infrastructure and steam generation capacity to prepare for our drilling program which should increase production to 5,000 BOE/D by year-end 2010. During the fourth quarter we will also initiate a steam flood pilot on our recently acquired
McKittrick 21Z property and expand our successful steam flood pilot at Ethel D. These activities are supported by continued strong demand for California crude oil which allowed us during the third quarter to execute twelve month contracts for most of our California production. “
Three Months Results
Sales from oil and gas were $127 million in the third quarter of 2009 compared to $194 million in the same 2008 period due primarily to lower oil and natural gas prices. For the same period, operating costs were lower by $2.94 per BOE due to lower natural gas prices which reduces the cost of steam in California and the continued results
of company-wide cost reduction initiatives. General and administrative costs were also lower by $0.78 per BOE as the Company continues to realize the benefits of its cost reduction efforts. Interest expense was higher by $6.5 million compared to the third quarter of 2008 as a result of issuing $450 million of 10.25% senior unsecured notes during the second and third quarters of 2009.
Contact: Berry Petroleum Company Investors
and Media
1999 Broadway, Suite 3700 David
Wolf 1-303-999-4400
Denver, Colorado 80202 Shawn
Canaday 1-303-999-4000
Internet: www.bry.com SOURCE:
Berry Petroleum Company
Berry Petroleum Company News Page 2
of 6Operational Update
Michael Duginski, executive vice president and chief operating officer, stated, “Our operating cost reductions have remained solid with a 25% reduction year to date compared to 2008 levels. These cost reductions, along with a narrowed California crude oil differential, allowed us to generate margins of approximately
$28.75 per BOE during the third quarter. Our N. Midway Diatomite production continues to perform as expected averaging 3,120 BOE/D in the third quarter, up 50% from the comparable 2008 quarter and up 7% from the second quarter of 2009. The necessary land work in E. Texas has been completed and we plan to spud our first horizontal Haynesville well in the Darco field in the fourth quarter of 2009. During the third quarter, we also tested high volume completions in the Piceance with
a 25% improvement in our initial production rate compared to our historical field average. We expect to increase production in the fourth quarter of 2009 as we complete our 2009 capital program and continue to expect companywide production to average 30,000 BOE/D in 2009. “
Costs Per BOE and Updated 2009 Guidance
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Anticipated range |
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Full-year 2009 per BOE |
3 mo. ended 09/30/09 |
3 mo. ended 09/30/08 |
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Operating costs-oil and gas production |
$ | 13.00 - 15.00 | $ | 14.99 | $ | 17.93 | ||||||
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Production taxes |
1.50 - 2.50 | 1.48 | 3.04 | |||||||||
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DD&A – oil and gas production (1) |
12.50 - 13.50 | 12.81 | 12.76 | |||||||||
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G&A |
4.25 - 4.75 | 4.09 | 4.87 | |||||||||
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Interest expense |
4.00 - 4.75 | 5.57 | 2.74 | |||||||||
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Total |
$ | 35.25 - 40.50 | $ | 38.94 | $ | 41.34 | ||||||
(1) Full-year estimate includes both oil & gas and electricity
2010 Capital and Production Guidance
While the Company is finalizing its 2010 capital plans, capital spending for 2010 is expected to range between $220 million and $260 million. This capital will likely be allocated approximately 65% to oil projects to fund the Diatomite development, steamflood developments at McKittrick 21Z and Ethel D and drilling at Brundage
Canyon. With this level of investment, production should increase approximately 5% with strong quarterly increases throughout the year.
Explanation and Reconciliation of Non-GAAP Financial Measures
Discretionary Cash Flow
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Three Months Ended |
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09/30/09 |
09/30/08 |
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Net cash provided by operating activities |
$ | 89.2 | $ | 137.4 | ||||
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Add back: Net increase (decrease) in current assets |
1.9 | 6.1 | ||||||
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Add back: Net decrease (increase) in current liabilities including book overdraft |
(31.6 | ) | (12.4 | ) | ||||
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Discretionary cash flow |
$ | 59.5 | $ | 131.1 | ||||
Contact: Berry Petroleum Company Investors
and Media
1999 Broadway, Suite 3700 David
Wolf 1-303-999-4400
Denver, Colorado 80202 Shawn
Canaday 1-303-999-4000
Internet: www.bry.com SOURCE:
Berry Petroleum Company
Berry Petroleum Company News Page 3
of 6Adjusted Net Income
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Three Months Ended | ||||
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09/30/09 |
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Net income before adjustments |
$ | 19.0 | ||
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After tax adjustments: |
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Non-cash hedge gains |
(2.4 | ) | ||
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Poso Creek Inventory trade sales |
(1.0 | ) | ||
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Write off of credit facility costs |
0.2 | |||
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Net gain on asset sales |
(0.1 | ) | ||
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Adjusted net income |
$ | 15.7 | ||
Teleconference Call
An earnings conference call will be held Friday, October 30, 2009 at 10:00 a.m. Eastern Time (8:00 a.m. Mountain Time). Dial 1-866-788-0547 to participate, using passcode 28922960. International callers may dial 857-350-1685. For a digital replay available until November 6, 2009 dial 1-888-286-8010
(passcode 98141508). 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 "expected," "project," 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,” and updated in the Company’s Form 10-Q filings subsequent to that date.
Contact: Berry Petroleum Company Investors
and Media
1999 Broadway, Suite 3700 David
Wolf 1-303-999-4400
Denver, Colorado 80202 Shawn
Canaday 1-303-999-4000
Internet: www.bry.com SOURCE:
Berry Petroleum Company
Berry Petroleum Company News Page 4
of 6|
CONDENSED STATEMENTS OF INCOME (continuing operations) | ||||||||||||||||||
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(In thousands) | ||||||||||||||||||
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(unaudited) | ||||||||||||||||||
| Three Months | Nine Months |
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09/30/09 |
09/30/08 |
09/30/09 |
09/30/08 |
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Revenues |
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Sales of oil and gas |
$ | 127,455 | $ | 193,890 | $ | 374,117 | $ | 514,578 | ||||||||||
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Sales of electricity |
9,137 | 18,317 | 26,032 | 51,223 | ||||||||||||||
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Gas marketing |
5,217 | 13,284 | 17,646 | 28,046 | ||||||||||||||
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Gain (loss) on commodity derivatives |
531 | 701 | 6,565 | (27 | ) | |||||||||||||
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Gain (loss) on sale of assets |
828 | 95 | 828 | 510 | ||||||||||||||
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Interest and other income, net |
287 | 747 | 1,375 | 2,509 | ||||||||||||||
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Total |
143,455 | 227,034 | 426,563 | 596,839 | ||||||||||||||
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Expenses |
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Operating costs – oil & gas |
39,195 | 52,486 | 111,317 | 144,158 | ||||||||||||||
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Operating costs – electricity |
6,892 | 13,706 | 22,071 | 45,620 | ||||||||||||||
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Production taxes |
3,874 | 8,912 | 14,411 | 20,663 | ||||||||||||||
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Depreciation, depletion & amortization - oil & gas |
33,502 | 37,354 | 104,271 | 87,462 | ||||||||||||||
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Depreciation, depletion & amortization - electricity |
951 | 646 | 2,938 | 1,991 | ||||||||||||||
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Gas marketing |
4,633 | 12,034 | 16,149 | 26,087 | ||||||||||||||
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General and administrative |
10,686 | 14,251 | 37,143 | 36,312 | ||||||||||||||
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Interest |
14,562 | 8,031 | 35,201 | 14,910 | ||||||||||||||
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Loss on extinguishment of debt |
329 | - | 10,823 | - | ||||||||||||||
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Dry hole, abandonment, impairment & exploration |
69 | 1,488 | 209 | 7,396 | ||||||||||||||
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Total |
114,693 | 148,908 | 354,533 | 384,599 | ||||||||||||||
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Income before income taxes |
28,762 | 78,126 | 72,030 | 212,240 | ||||||||||||||
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Provision for income taxes |
10,423 | 28,511 | 24,681 | 79,377 | ||||||||||||||
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Income from continuing operations |
18,339 | 49,615 | 47,349 | 132,863 | ||||||||||||||
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(Loss) income from discontinued operations, net |
668 | 3,733 | (6,323 | ) | 12,657 | |||||||||||||
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Net income |
$ | 19,007 | $ | 53,348 | $ | 41,026 | $ | 145,520 | ||||||||||
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Basic net income from continuing operations per share |
$ | 0.41 | $ | 1.10 | $ | 1.04 | $ | 2.95 | ||||||||||
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Basic net income (loss) from discontinued operations per common share |
$ | 0.01 | $ | 0.08 | $ | (0.14 | ) | $ | 0.28 | |||||||||
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Basic net income per common share |
$ | 0.42 | $ | 1.18 | $ | 0.90 | $ | 3.23 | ||||||||||
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Diluted net income from continuing operations per share |
$ | 0.40 | $ | 1.08 | $ | 1.03 | $ | 2.90 | ||||||||||
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Diluted net income (loss) from discontinued operations per common share |
$ | 0.01 | $ | 0.08 | $ | (0.14 | ) | $ | 0.28 | |||||||||
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Diluted net income per common share |
$ | 0.41 | $ | 1.16 | $ | 0.89 | $ | 3.18 | ||||||||||
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Cash dividends per share |
$ | 0.075 | $ | 0.075 | $ | 0.225 | $ | 0.225 | ||||||||||
Contact: Berry Petroleum Company Investors
and Media
1999 Broadway, Suite 3700 David
Wolf 1-303-999-4400
Denver, Colorado 80202 Shawn
Canaday 1-303-999-4000
Internet: www.bry.com SOURCE:
Berry Petroleum Company
[ Berry Petroleum Company News Page 5
of 6
Berry Petroleum Company News Page 5
of 6|
CONDENSED BALANCE SHEETS |
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(In thousands) |
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(unaudited) |
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09/30/09 |
12/31/08 |
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Assets |
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Current assets |
$ | 109,401 | $ | 189,080 | ||||
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Property, buildings & equipment, net |
2,096,897 | 2,254,425 | ||||||
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Fair value of derivatives |
1,002 | 79,696 | ||||||
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Other assets |
33,245 | 19,182 | ||||||
| $ | 2,240,545 | $ | 2,542,383 | |||||
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Liabilities & Shareholders’ Equity |
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Current liabilities |
$ | 149,041 | $ | 260,625 | ||||
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Deferred taxes |
250,045 | 270,323 | ||||||
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Long-term debt |
1,000,925 | 1,131,800 | ||||||
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Other long-term liabilities |
64,057 | 47,888 | ||||||
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Fair value of derivatives |
41,316 | 4,203 | ||||||
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Shareholders’ equity |
735,161 | 827,544 | ||||||
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$ | 2,240,545 | $ | 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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Nine Months |
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09/30/09 |
09/30/08 |
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Cash flows from operating activities: |
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Net income |
$ | 41,026 | $ | 145,520 | ||||
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Depreciation, depletion & amortization (DD&A) |
109,397 | 98,579 | ||||||
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Loss on debt issuance costs |
10,823 | - | ||||||
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Dry hole & impairment |
9,643 | 6,858 | ||||||
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Commodity derivatives |
4,796 | (8 | ) | |||||
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Stock based compensation |
7,054 | 6,653 | ||||||
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Deferred income taxes |
13,546 | 76,502 | ||||||
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Gain on sale of asset |
79 | (510 | ) | |||||
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Other, net |
(362 | ) | (1,500 | ) | ||||
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Net changes in operating assets and liabilities |
(47,623 | ) | (846 | ) | ||||
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Net cash provided by operating activities |
148,379 | 331,248 | ||||||
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Net cash provided by (used in) investing activities |
12,111 | (986,865 | ) | |||||
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Net cash (used in) provided by financing activities |
(159,755 | ) | 655,360 | |||||
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Net increase (decrease) in cash and cash equivalents |
735 | (257 | ) | |||||
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Cash and cash equivalents at beginning of year |
240 | 316 | ||||||
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Cash and cash equivalents at end of period |
$ | 975 | $ | 59 | ||||
Contact: Berry Petroleum Company Investors
and Media
1999 Broadway, Suite 3700 David
Wolf 1-303-999-4400
Denver, Colorado 80202 Shawn
Canaday 1-303-999-4000
Internet: www.bry.com SOURCE:
Berry Petroleum Company
Berry Petroleum Company News Page 6
of 6COMPARATIVE OPERATING STATISTICS
(Unaudited)
Three Months
|
September 30, 2009 |
% |
September 30, 2008 |
% |
June 30, 2009 |
% |
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Heavy Oil Production (Bbl/D) |
16,780 | 59 | 17,264 | 49 | 16,822 | 57 | ||||||||||||||||||
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Light Oil Production (Bbl/D) |
2,530 | 9 | 3,898 | 11 | 3,085 | 11 | ||||||||||||||||||
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Total Oil Production (Bbl/D) |
19,310 | 68 | 21,162 | 60 | 19,907 | 68 | ||||||||||||||||||
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Natural Gas Production (Mcf/D) |
54,637 | 32 | 83,928 | 40 | 56,174 | 32 | ||||||||||||||||||
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Total Production (BOE/D) |
28,417 | 100 | 35,150 | 100 | 29,270 | 100 | ||||||||||||||||||
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DJ Basin Production (BOE/D) |
- | 3,337 | - | |||||||||||||||||||||
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Production – Continuing Operations (BOE/D) |
28,417 | 31,813 | 29,270 | |||||||||||||||||||||
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Oil and gas BOE for continuing operations: |
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Average sales price before hedging |
$ | 45.41 | $ | 83.90 | $ | 39.34 | ||||||||||||||||||
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Average sales price after hedging |
46.39 | 67.04 | 45.74 | |||||||||||||||||||||
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Oil, per Bbl, for continuing operations: |
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Average WTI price |
$ | 68.24 | $ | 118.22 | $ | 59.79 | ||||||||||||||||||
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Price sensitive royalties |
(2.36 | ) | (5.30 | ) | (2.08 | ) | ||||||||||||||||||
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Quality differential and other |
(8.78 | ) | (10.80 | ) | (7.86 | ) | ||||||||||||||||||
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Crude oil hedges |
0.87 | (26.12 | ) | 8.91 | ||||||||||||||||||||
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Average oil sales price after hedging |
$ | 57.97 | $ | 76.00 | $ | 58.76 | ||||||||||||||||||
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Natural gas price for continuing operations: |
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Average Henry Hub price per MMBtu |
$ | 3.39 | $ | 10.24 | $ | 3.51 | ||||||||||||||||||
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Conversion to Mcf |
0.17 | 0.51 | 0.18 | |||||||||||||||||||||
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Natural gas hedges |
0.20 | 0.20 | 0.21 | |||||||||||||||||||||
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Location, quality differentials and other |
(0.28 | ) | (2.69 | ) | (0.72 | ) | ||||||||||||||||||
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Average gas sales price after hedging per Mcf |
$ | 3.48 | $ | 8.26 | $ | 3.18 | ||||||||||||||||||
# # #
Contact: Berry Petroleum Company Investors
and Media
1999 Broadway, Suite 3700 David
Wolf 1-303-999-4400
Denver, Colorado 80202 Shawn
Canaday 1-303-999-4000
Internet: www.bry.com SOURCE:
Berry Petroleum Company