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 31, 2007
BERRY
PETROLEUM COMPANY
(Exact
Name of Registrant as Specified in its Charter)
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DELAWARE
(State
or Other Jurisdiction of
Incorporation
or Organization)
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1-9735
(Commission
File Number)
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77-0079387
(IRS
Employer
Identification
Number)
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5201
TRUXTUN AVE., STE. 300, BAKERSFIELD, CA
(Address
of Principal Executive Offices)
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93309
(Zip
Code)
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Registrant’s
telephone number, including area code: (661)
616-3900
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
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1
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Item
2.02 Results of Operations and Financial Condition
On October
31, 2007, Berry Petroleum Company issued a news release announcing its financial
and operational results for the third quarter ended September 30,
2007. These results are discussed in the news release attached hereto as Exhibit
99.1, which is incorporated by reference in its entirety.
Item
9.01
Financial
Statements and Exhibits
(d)
Exhibits
99.1
-
News Release by Berry Petroleum Company dated October 31, 2007, titled
"Berry Petroleum Earns $.60 Per Share in Third Quarter 2007"announcing
the
Registrant's results for the third quarter ended September 30, 2007.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereto
duly authorized.
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BERRY
PETROLEUM COMPANY
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By:
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/s/ Kenneth
A. Olson
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Kenneth
A. Olson
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Corporate
Secretary
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Date: October
31, 2007
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2
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Berry
Petroleum Company News
Contact:
Berry Petroleum Company
5201
Truxtun Ave., Ste.
300
Bakersfield,
CA 93309
1-661-616-3900
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Contacts:
Robert F. Heinemann, President and CEO - - Ralph J. Goehring, Executive
Vice President and CFO
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Berry
Petroleum Earns $.60 Per Share in Third Quarter 2007
Record
Oil Production
Levels from
Poso
Creek
and
Diatomite
Assets
Bakersfield,
Calif. -- (BUSINESS WIRE) -- October 31, 2007 -- Berry Petroleum
Company (NYSE:BRY) earned net income of $26.9 million, or $.60 per diluted
share, for the three months ending September 30, 2007, compared to $31.4
million, or $.70 per diluted share, for the third quarter of 2006, according
to
Robert F. Heinemann, president and chief executive officer. Third quarter
net
income included a write-down of the value of certain prospective acreage
and a
gain on sale of assets. Excluding these items, net income for the three
months
ended September 30, 2007 was $29.2 million or $.65 per diluted
share.
Revenues
for the third quarter of 2007 increased by 3% to $134 million compared
to the
third quarter of 2006. Discretionary cash flow totaled $71 million in
the third
quarter of 2007, compared to $73 million in the comparable 2006 period
and was
20% higher than the $59 million achieved in the second quarter of 2007.
(Discretionary cash flow is a non-GAAP measure; see reconciliation
below.)
For
the
third quarter of 2007, net production averaged 26,873 barrels of oil
equivalent
per day (BOE/D), an increase of 2% from the 26,423 BOE per day achieved
in the
third quarter of 2006 and a decrease of 1% compared to the second quarter
2007.
Excluding the production impact of assets sold in the second quarter
of 2007,
production in the third quarter increased slightly. Total natural gas
production
in the third quarter of 2007 was up 19% over the third quarter of 2006
and 5%
from the second quarter of 2007. In the third quarter of 2007 the average
realized sales price net of hedging was $47.93 per BOE compared to $47.28
per
BOE in the third quarter of 2006 and $45.43 per BOE in the second quarter
of
2007.
Mr.
Heinemann continued, “We achieved record oil production from our Poso Creek
and diatomite assets in the third quarter and these steam enhanced oil
properties continue to benefit from strong crude prices and low natural
gas
prices. Poso Creek averaged 2,100 Bbls/d in the third quarter compared
to 1,800
Bbls/d in the second quarter of 2007 and averaged over 2,400 Bbls/d in
September
2007. We anticipate drilling another 23 wells on this property in the
fourth
quarter and expect this asset to exit the year at approximately 2,600
Bbls/d.
“Oil
production from our diatomite asset also increased to record levels in
the third
quarter, even with only two wells drilled in the third quarter. We continue
to efficiently manage our steam injection and our production averaged
1,100
Bbls/d during the third quarter, compared to 900 Bbls/d in the second
quarter.
In the fourth quarter, we expect to drill 27 wells in the diatomite and
plan to
exit 2007 with production at approximately 1,250 Bbls/d.
“In
the
Piceance Basin we continue to improve our average drilling days for our
mesa
locations. Drilling for our last four Garden Gulch wells averaged 17
days and
drilling for our last four North Parachute Ranch wells averaged 25 days.
We are
targeting drilling days at Garden Gulch to be under 17 days and under
25 days
for North Parachute Ranch locations. We are confident that we can maintain
this
efficiency which will deliver improved economics on this project. Our
third
quarter daily average production in the Piceance Basin increased to 11.5
MMcf/d
or a 40% increase compared to the second quarter of 2007 and we are anticipating
another 30% increase, or an average production of 15 MMcf/d in the fourth
quarter of 2007.
“Our
natural gas production is growing, and comprised 27% of our total production
in
the third quarter of 2007 compared to 24% in the second quarter. The
overall
impact on our operating income due to lower gas prices is reduced due
to our
significant natural gas consumption for steaming operations in California
and
the natural gas hedges that we have in place. We estimate that for 2008,
a $1.00
per MMBtu change in NYMEX Henry Hub natural gas prices would result in
only a $3
million change in annual net income, demonstrating our relative insensitivity
to
natural gas prices company-wide. For 2008, we are hedged at an average
$6.26 per
MMBtu on Colorado Interstate Gas pricing on volume of approximately 18,300
MMBtu/d.”
1
Nine
Months Results
Net
income for the nine months of 2007 was $97.7 million or $2.18 per diluted
share,
up 10% from $88.8 or $1.98 per diluted share in the comparable 2006 period.
Excluding a net gain related to the disposition of non-core assets, net
income
for the nine months ended September 30, 2007 was $65.9 million or $1.47
per
diluted share. This decrease is due to lower realized oil and gas prices,
higher
operating costs, increased depreciation, depletion & amortization (DD&A)
charges related to increased development activity and increased interest
expense.
Discretionary
cash flow totaled $182 million for the first nine months of 2007, down
from $195
million in the comparable 2006 period, a decrease of 7% over the comparable
period in 2006.
For
the
nine months ended September 30, 2007, net production averaged 26,525
BOE/D, an
increase of 7% from the 24,896 BOE/D achieved in the same period in 2006.
The
average realized sales price per BOE, net of hedging, for the nine months
ended
September 30, 2007 was $45.82 per BOE, down 5% from the $48.33 per BOE
received
in the 2006 period.
Operations
During
the third quarter of 2007 the Company drilled 99 gross (83 net) wells with
a success rate of 97 percent. For the third quarters of 2007 and 2006
the mix of
average net oil and natural gas production was as follows:
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Third
Quarter ended September 30
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2007
Production
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2006
Production
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Oil
(Bbls)
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19,481
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73 | % |
20,194
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76 | % | ||||||||||
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Natural
Gas (BOE)
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7,392
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27 | % |
6,229
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24 | % | ||||||||||
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Total
BOE per day
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26,873
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100 | % |
26,423
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100 | % | ||||||||||
Ralph
J.
Goehring, executive vice president and chief financial officer, stated,
“We
reduced our debt level (long-term debt and line of credit) by $35 million
in the
third quarter to $440 million from $475 million at June 30, 2007. Although
third
quarter 2007 operating costs were higher than 2006 levels, this is the
second
consecutive quarter that we have seen our per-unit operating costs decline.
For
the first, second and third quarters of 2007 our operating costs per
BOE
averaged $14.65, $14.44 and $13.75, respectively. The largest driver
in this
trend is lower natural gas costs for steaming operations in California.
Our
average all-in fuel cost of natural gas in California was $4.84 per MMBtu,
down
25% from our comparable fuel cost in the second quarter of 2007.
“Separately,
we are moving forward with our plans, as previously announced, to form
a Master
Limited Partnership (MLP). The MLP is expected to own certain of Berry
Petroleum’s long-lived oil and natural gas properties. We expect to file a
registration statement with the U.S. Securities and Exchange Commission
for the
initial public offering of common units of the MLP during the fourth
quarter of
2007.”
2
Explanation
and Reconciliation of Non-GAAP Financial Measures
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Three
Months Ended
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Nine
Months Ended
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|||||||||||||||||||
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09/30/07
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09/30/06
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06/30/07
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9/30/07
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9/30/06
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Net
cash provided by operating activities
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$ |
92.5
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$ |
101.0
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$ |
80.4
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$ |
184.5
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$ |
185.1
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Add
back: Net increase (decrease) in current assets
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5.7
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(0.6 | ) | (8.2 | ) |
10.8
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18.0
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Add
back: Net decrease (increase) in current liabilities
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(27.7 | ) | (27.3 | ) | (13.5 | ) | (13.1 | ) | (8.6 | ) | ||||||||||
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Discretionary
cash flow
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$ |
70.5
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$ |
73.1
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$ |
58.7
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$ |
182.2
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$ |
194.5
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Teleconference
Call
An
earnings conference call will be held Wednesday, October 31, 2007 at
1:30 p.m.
Eastern Time (10:30 a.m. Pacific Time). Dial 1-888-873-4896 to
participate, using passcode 65745746. International callers may dial
617-213-8850. For a digital replay available through November 8, 2007
dial 1-888-286-8010 (passcode 91345141). Listen live or via replay on
the web at
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 its headquarters in Bakersfield,
California.
Safe
harbor under the “Private Securities Litigation Reform Act of
1995”
Any
statements in this news release that are not historical facts are
forward-looking statements that involve risks and uncertainties, including,
among other things, that the MLP will not be formed, will not complete
an
offering of securities and will not complete such actions on the timetable
indicated. Words such as "plans,” “anticipates," "will," "expect,"
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 our 2006 Form 10-K filed with the Securities and
Exchange Commission on February 28, 2007 and
all material changes are updated in Part II, Item 1A within our Form
10-Qs filed
subsequent to that date.
This
announcement shall not constitute an offer to sell or the solicitation
of an
offer to buy any securities, nor shall there be any sale of any securities
in
any state or jurisdiction in which the offer, solicitation or sale of
securities
would be unlawful. The securities will only be offered and sold pursuant
to a
registration statement filed under the Securities Act of 1933, as
amended.
3
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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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|||||||||||||||
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09/30/07
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09/30/06
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09/30/07
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09/30/06
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Revenues
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Sales
of oil and gas
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$ |
118,733
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$ |
116,168
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$ |
333,933
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$ |
328,742
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Sales
of electricity
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12,241
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12,592
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40,704
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39,476
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Gain
on sale of assets
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1,418
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51,816
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-
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Interest
and other income, net
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1,108
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603
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3,754
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1,898
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Total
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133,500
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129,363
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430,207
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370,116
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Expenses
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Operating
costs – oil &
gas
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33,995
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30,950
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103,330
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83,763
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Operating
costs – electricity
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9,760
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11,198
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35,014
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36,155
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Production
taxes
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4,344
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5,286
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12,297
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11,891
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Depreciation,
depletion & amortization - oil & gas
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23,356
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17,974
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65,478
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47,333
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Depreciation,
depletion & amortization - electricity
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938
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825
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2,661
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2,526
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General
and
administrative
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9,333
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9,419
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29,291
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25,610
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Interest
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4,326
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2,707
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13,593
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6,745
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Commodity
derivatives
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-
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-
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-
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(736 | ) | |||||||||||
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Dry
hole, abandonment, impairment & exploration
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5,175
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527
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9,342
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11,070
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Total
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91,227
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78,886
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271,006
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224,357
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Income
before income
taxes
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42,273
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50,477
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159,201
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145,759
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Provision
for income
taxes
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15,418
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19,103
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61,534
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56,930
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Net
income
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$ |
26,855
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$ |
31,374
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$ |
97,667
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$ |
88,829
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Basic
net income per
share
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$ |
.61
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$ |
.71
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$ |
2.22
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$ |
2.02
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Diluted
net income per
share
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$ |
.60
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$ |
.70
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$ |
2.18
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$ |
1.98
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Cash
dividends per
share
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$ |
.075
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$ |
.095
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$ |
.225
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$ |
.225
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Weighted
average common shares:
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Basic
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44,112
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43,907
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44,020
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43,982
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Diluted
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45,002
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44,665
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44,836
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44,875
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4
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CONDENSED
BALANCE SHEETS
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||||||||
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(In
thousands)
|
||||||||
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(unaudited)
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||||||||
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09/30/07
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12/31/06
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Assets
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Current
assets
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$ |
114,106
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$ |
98,809
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Properties,
buildings & equipment, net
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1,237,921
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1,080,631
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Other
assets
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16,574
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19,557
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| $ |
1,368,601
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$ |
1,198,997
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Liabilities
& Shareholders’ Equity
|
||||||||
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Current
liabilities
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$ |
205,075
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$ |
215,403
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Deferred
income taxes
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143,320
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103,515
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Long-term
debt
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435,000
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390,000
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Other
long-term liabilities
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88,086
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62,379
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Shareholders’
equity
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497,120
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427,700
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$ |
1,368,601
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$ |
1,198,997
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CONDENSED
STATEMENTS OF CASH FLOWS
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(In
thousands)
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||||||||
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(unaudited)
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||||||||
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Nine
Months
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||||||||
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09/30/07
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09/30/06
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Cash
flows from operating activities:
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Net
income
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$ |
97,667
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$ |
88,829
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Depreciation,
depletion & amortization (DD&A)
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68,139
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49,858
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Dry
hole, abandonment & impairment
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8,065
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6,396
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Commodity
derivatives
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804
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(264 | ) | |||||
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Stock-based
compensation
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5,437
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3,563
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||||||
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Deferred
income taxes
|
53,162
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44,410
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||||||
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Gain
on sale
|
(51,816 | ) |
-
|
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Other,
net
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750
|
1,749
|
||||||
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Net
changes in operating assets and liabilities
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2,331
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(9,396 | ) | |||||
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Net
cash provided by operating activities
|
184,539
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185,145
|
||||||
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Net
cash used in investing activities
|
(210,079 | ) | (419,801 | ) | ||||
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Net
cash provided by financing activities
|
25,315
|
233,018
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||||||
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Net
decrease in cash and cash equivalents
|
(225 | ) | (1,638 | ) | ||||
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Cash
and cash equivalents at beginning of year
|
416
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1,990
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Cash
and cash equivalents at end of period
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$ |
191
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$ |
352
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5
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COMPARATIVE
OPERATING STATISTICS
|
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(unaudited)
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||||||||||||||||||||||||
|
Three
Months
|
Nine
Months
|
|||||||||||||||||||||||
|
|
09/30/07
|
09/30/06
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Change
|
09/30/07
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09/30/06
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Change
|
||||||||||||||||||
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Oil
and gas:
|
||||||||||||||||||||||||
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Net production-BOE
per day
|
26,873
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26,423
|
+2 | % |
26,525
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24,896
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+7 | % | ||||||||||||||||
|
Per
BOE:
|
||||||||||||||||||||||||
|
Average
sales price before hedges
|
$ |
49.35
|
$ |
50.33
|
-2 | % | $ |
45.98
|
$ |
50.81
|
-10 | % | ||||||||||||
|
Average
sales price after hedges
|
47.93
|
47.28
|
+1 | % |
45.82
|
48.33
|
-5 | % | ||||||||||||||||
|
Operating
costs - oil and gas
|
13.75
|
12.73
|
+8 | % |
14.27
|
12.32
|
+16 | % | ||||||||||||||||
|
Production
taxes
|
1.76
|
2.17
|
-19 | % |
1.70
|
1.75
|
-3 | % | ||||||||||||||||
|
Total
operating costs
|
15.51
|
14.90
|
+4 | % |
15.97
|
14.07
|
+14 | % | ||||||||||||||||
|
DD&A -
oil and
gas
|
9.45
|
7.39
|
+28 | % |
9.04
|
6.96
|
+30 | % | ||||||||||||||||
|
General
& administrative expenses
|
3.78
|
3.87
|
-2 | % |
4.05
|
3.77
|
+7 | % | ||||||||||||||||
|
|
||||||||||||||||||||||||
|
Interest
expense
|
$ |
1.75
|
$ |
1.11
|
+58 | % | $ |
1.88
|
$ |
.99
|
+90 | % | ||||||||||||
#
#
#