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United States securities and exchange commission logo
November 4, 2022
Cary Baetz
Chief Financial Officer
Berry Corporation (bry)
16000 Dallas Parkway, Suite 500
Dallas, Texas 75248
Re: Berry Corporation
(bry)
Form 10-K for
Fiscal Year Ended December 31, 2021
Form 8-K filed
November 2, 2022
File No. 001-38606
Dear Cary Baetz:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments. In some of our comments, we
may ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 10-K for Fiscal Year Ended December 31, 2021
Management's Discussion and Analysis of Financial Condition and Results
of Operations
How We Plan and Evaluate Operations
Operating Expenses, page 70
1. We note your use of the
measure Operating Expenses and the definition provided on page
70 along with the
measure Unhedged Operating Expenses. In addition, we note disclosure
in note 1 on page 79
that We report electricity, transportation and marketing sales
separately in our
financial statements as revenues in accordance with GAAP. However,
these revenues are
viewed and used internally in calculating operating expenses which is
used to track and
analyze the economics of development projects and the efficiency of our
hydrocarbon recovery.
Tell us how you considered whether Operating Expenses and
Unhedged Operating
Expenses are non-GAAP measures.
If these are non-GAAP
measures, provide disclosure consistent with Item 10(e) of
Cary Baetz
FirstName LastNameCary
Berry Corporation (bry) Baetz
Comapany 4,
November NameBerry
2022 Corporation (bry)
November
Page 2 4, 2022 Page 2
FirstName LastName
Regulation S-K. In addition, revise the names of these measures to
comply with Item
10(e)(1)(ii)(E) of Regulation S-K and tell us whether they represent
non-GAAP measures
that substitute individually tailored recognition and measurement
methods for those of
GAAP per Question 100.04 of the Non-GAAP Compliance and Disclosure
Interpretations.
2. With your response to the preceding comment, please explain whether
unhedged lease
operating expenses, unhedged fuel purchase price, and unhedged fuel
cost as disclosed in
your September 30, 2022 Form 10-Q are non-GAAP measures for which the
disclosures
per Item 10(e) of Regulation S-K should be provided.
Certain Operating and Financial Information
Summary by Area, page 76
3. We note your presentation by area of Operating Income (Loss) and the
disclosure in note
1 explaining how the amounts are derived. Please tell us whether this
is a non-GAAP
measure for which disclosure pursuant to Item 10(e) of Regulation S-K
should be
provided.
Non-GAAP Financial Measures, page 91
4. It appears that your disclosure as to why the measures Adjusted Net
Income (Loss) and
Adjusted General and Administrative Expenses are useful to investors
is general in nature.
Please revise your disclosure to explain in greater detail the reasons
why these non-GAAP
measures are useful to investors. Refer to Item 10(e)(1)(i)(C) of
Regulation S-K.
5. We note that you have identified certain adjustments to the non-GAAP
measures
presented in your filing as Non-recurring. Please revise your
presentation to comply
with Item 10(e)(1)(ii)(B) of Regulation S-K and Question 102.03 of the
Compliance
& Disclosure Interpretations regarding Non-GAAP Financial Measures.
6. Revise your reconciliation from Net Cash Provided by Operating
Activities to Adjusted
EBITDA to clarify the nature of the adjustment titled Other changes
in operating assets
and liabilities.
7. We note that you use Levered Free Cash Flow "to plan capital
allocation to sustain
production levels and for internal growth opportunities, as well as
hedging needs" and to
assess "[y]our financial performance and [y]our ability to generate
excess cash from
operations to service debt, pay fixed dividends and accelerate [y]our
asset retirement
activity." Please revise your description of this measure as it
appears to imply that
Levered Free Cash Flow represents the residual cash flow available for
discretionary
expenditures. Refer to Question 102.07 of the Compliance & Disclosure
Interpretations
on Non-GAAP Financial Measures.
8. We note your reconciliation from Net Income (Loss) to Adjusted Net
Income and your
adjustment for Income tax expense of adjustments at effective tax
rate. Please clarify
Cary Baetz
FirstName LastNameCary
Berry Corporation (bry) Baetz
Comapany 4,
November NameBerry
2022 Corporation (bry)
November
Page 3 4, 2022 Page 3
FirstName LastName
how the tax impact was calculated for each period presented. In
addition, explain the
nature of the adjustment for "discrete income tax items." As part of
your response, tell us
how the adjustments to this non-GAAP measure for the effects of income
taxes are
consistent with Question 102.11 of the Compliance & Disclosure
Interpretations on Non-
GAAP Financial Measures.
9. Please provide a reconciliation of Basic and Diluted EPS on Adjusted
Net Income to
GAAP Net Income (Loss) per share. Refer to Item 10(e)(1)(i)(B) of
Regulation S-K and
Question 102.05 of the Compliance and Disclosure Interpretations on
Non-GAAP
Financial Measures.
Inflation, page 97
10. Your disclosure notes that elevated inflation may cause you to
experience further cost
increases for your operations. Please expand this disclosure to
clarify the resulting impact
to you from inflationary pressures. For example, we note from the
disclosure in your
September 30, 2022 Form 10-Q that capital expenditures increased
partially due to cost
inflation in excess of your expectations.
Form 8-K filed November 2, 2022
Non-GAAP Financial Measures And Reconciliations
11. Please consider the above comments on non-GAAP measures with regard to
the
disclosure in this Form 8-K. In addition, revise your disclosure to
explain why the non-
GAAP measure Adjusted EBITDA Unhedged provides useful information to
investors per
Item 10(e)(1)(i)(C) of Regulation S-K.
12. Revise your disclosure of non-GAAP full-year 2022 guidance to provide
disclosure
consistent with Item 10(e)(1)(i)(B) of Regulation S-K.
13. You identify Discretionary Free Cash Flow as the primary metric to
determine the
quarterly variable dividend, but note that it is allocated between
dividends, debt
repurchases, and opportunistic growth. Please revise to more
clearly explain how
Discretionary Free Cash Flow provides useful information in assessing
your financial
condition. Note that the name of this measure and its description
should not imply that
Discretionary Free Cash Flow represents the residual cash flow
available for discretionary
expenditures per Question 102.07 of the Compliance & Disclosure
Interpretations on
Non-GAAP Financial Measures. In addition, as you identify strategic
growth as a
competitive advantage, please tell us why this measure is not adjusted
for all capital
expenditures.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
Cary Baetz
Berry Corporation (bry)
November 4, 2022
Page 4
You may contact Jennifer O'Brien, Staff Accountant, at 202-551-3721 or
Ethan
Horowitz, Accounting Branch Chief, at 202-551-3311 with any questions.
FirstName LastNameCary Baetz Sincerely,
Comapany NameBerry Corporation (bry)
Division of Corporation
Finance
November 4, 2022 Page 4 Office of Energy &
Transportation
FirstName LastName