SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 19, 1996
Berry Petroleum Company
(Exact name of registrant as specified in its charter)
Delaware 1-9735 77-0079387
(State or other (Commission IRS Employer
jurisdiction of File Number) Identification No.
incorporation)
28700 Hovey Hills Road, P.O. Bin X, Taft, CA 93268
(Address of principal executive offices)
Registrant's telephone number, including area code (805) 769-8811
N/A
(Former name or former address, if changed since last report)
2
Item 2. Acquisition or Disposition of Assets.
On November 19, 1996, Berry Petroleum Company, a Delaware
corporation (the "Company"), purchased certain assets from,
Tannehill Oil Company, Inc., a California corporation, Tannehill
Electric Company, Inc., a California corporation, Tannehill Oil
Company, a general partnership (the "Partnership"), and the
general partners of the Partnership, and acquired/paid off the
related ownership/security interest of Security Pacific Leasing
Corporation for the aggregate consideration of $25.5 million,
payable $18.6 million in cash and $6.9 million in unsecured
promissory notes. In addition, the Partnership received a
Warrant to purchase 100,000 shares of the Class A Common Stock of
the Company. The cash consideration was paid from existing
working capital of the Company.
The assets purchased include oil producing properties,
power cogeneration assets, and equipment, machinery, fixtures and
other assets associated with heavy oil production activities.
The primary Tannehill oil producing properties, which are fee
properties, are located between two of the Company's producing
South Midway-Sunset field properties. These Tannehill properties
currently produce approximately 1,300 barrels per day ("BPD") of
heavy (13 degree API) crude oil from 169 wells and have estimated
reserves of over seven (7) million barrels. The 18 megawatt
cogeneration facility supplies approximately 5,500 BPD of steam
to the oil producing properties.
Item 7. Financial Statements and Exhibits.
(a). Financial Statements. Included herein.
(b). Pro Forma Financial Information. Included herein.
(c). Exhibits.
10.1* Purchase and Sale Agreement, dated as of November 8, 1996,
by and between the Registrant and Tannehill Oil Company, Inc., a
California corporation.
10.2* Purchase and Sale Agreement, dated as of November 8, 1996,
by and between the Registrant and Tannehill Electric Company,
Inc., a California corporation.
10.3* Purchase and Sale Agreement, dated as of November 8, 1996,
by and between the Registrant and Tannehill Oil Company, a
California general partnership, and Boyce Resource Development
Company, a California corporation; Albert G. Boyce, Jr., as
Trustee of Trust "B" Under the Will of Albert G. Boyce, Sr.,
Deceased; William J. Boyce; Albert Gallatin Boyce V; Mary
Katharine Boyce; John T. Hinkle; Bettianne H. Bowen; Vernier
Resources Corporation, a Texas corporation; James L. Hinkle;
General Western, Inc., a New Mexico corporation; Delmar R.
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Archibald and Joy A. Archibald, Trustees of the Delmar R.
Archibald Family Trust, dated June 22, 1982; Lisle Q. Tannehill;
John W. Tannehill; Gail Kay Tannehill, as Trustee of the Gail Kay
Tannehill Family Trust, dated April 9, 1996; and Thomas H.
Tannehill, all acting as partners of Tannehill Oil Company and
individually, jointly and severally.
* Incorporated by reference to the original Form 8K filed
electronically on EDGAR December 2, 1996.
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Berry Petroleum Company
TANNEHILL 8K/A INDEX
Report of Coopers & Lybrand L.L.P., 5
Independent Accountants
Historical Summary of Gross Revenues and
Direct Operating Expenses for the Nine Months
Ended September 30, 1996 6
Unaudited Pro Forma Financial Information 8
Supplemental Information About Oil & Gas
Producing Activities (Unaudited) 9
5
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors
Berry Petroleum Company
We have audited the accompanying historical summary of gross
revenues and direct operating expenses of the Tannehill
Properties for the nine months ended September 30, 1996. This
historical summary is the responsibility of Berry Petroleum
Company's management. Our responsibility is to express an opinion
on the historical summary based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the historical summary is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the historical summary. An audit also
includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall presentation of the historical summary. We believe
that our audit provides a reasonable basis for our opinion.
The accompanying historical summary was prepared for the
purpose of complying with the rules and regulations of the
Securities and Exchange Commission (for the inclusion in Berry
Petroleum Company's Form 8-K) and is not intended to be a
complete presentation of the revenues and expenses of the
Tannehill Properties. It excludes certain material expenses,
described in Note 1, that were incurred in connection with the
operations of the properties.
In our opinion, the historical summary referred to in the
first paragraph (prepared on the basis described in Note 1)
presents fairly, in all material respects, the gross revenues and
direct operating expenses of the Tannehill Properties for the
nine months ended September 30, 1996 in conformity with generally
accepted accounting principles.
Los Angeles, California
January 30, 1997
6
Berry Petroleum Company
The Tannehill Properties
Historical Summary of Gross Revenues
and Direct Operating Expenses
for the Nine Months Ended
September 30, 1996
(000's)
Gross revenues $ 5,797
Direct operating expenses (1) 3,894
-------
Excess of revenues over direct operating expenses (2) $ 1,903
=======
(1) Excludes depreciation, depletion and amortization.
(2) Does not include provision for income taxes.
The accompanying note is an integral part of this historical summary
of gross revenues and direct operating expenses.
7
Berry Petroleum Company
The Tannehill Properties
Note to Historical Summary of Gross Revenues
And Direct Operating Expenses
1. Basis of Presentation
On November 19, 1996, Berry Petroleum Company, a Delaware
corporation (the "Company"), purchased certain assets from,
Tannehill Oil Company, Inc., a California corporation, Tannehill
Electric Company, Inc., a California corporation, Tannehill Oil
Company, a general partnership (the "Partnership"), and the
general partners of the Partnership, and acquired/paid off the
related ownership/security interest of Security Pacific Leasing
Corporation for the aggregate consideration of $25.5 million,
payable $18.6 million in cash and $6.9 million in unsecured
promissory notes. In addition, the Partnership received a
Warrant to purchase 100,000 shares of the Class A Common Stock of
the Company. The cash consideration was paid from existing
working capital of the Company.
Historical financial statements reflecting financial
position, results of operations and cash flows required by
generally accepted accounting principles are not presented as
such information is neither readily available nor meaningful for
the Tannehill properties. Accordingly, a historical summary is
presented in lieu of the financial statements required under Rule
3-05 of Securities and Exchange Commission Regulations S-X. The
accompanying historical summary includes the gross revenues and
direct operating expenses attributable to the production and sale
of hydrocarbons produced from the Tannehill properties for the
nine month period ended September 30, 1996. All intercompany
transactions have been eliminated. Depreciation, depletion and
amortization, interest expense, income tax expense, land, legal,
accounting, marketing and other general and administrative
expenses are excluded from the presentation.
The preparation of the historical summary of gross revenues
and direct operating expenses requires management to make
estimates and assumptions that affect the reported amounts of
gross revenues and direct operating expenses during the reporting
period. Actual results could differ from those estimates.
8
Berry Petroleum Company
The Tannehill Properties
Unaudited Pro Forma Financial Information
The following unaudited pro forma financial information sets
forth on a pro forma basis the adjustments which would have been
made to the Company's income statement for the nine month period
ended September 30, 1996 assuming the Acquisition had occurred as
of January 1, 1996 (in thousands, except per share data)
Nine Months
Ended
September 30,
1996
Net income per the Company's income
statement as reported $ 12,271
Tannehill net income, unadjusted 746
Adjustment as a result of owning rather than
leasing the cogeneration facility and reduction
in operations & maintenance fee charged to the
facility due to termination of contract 1,368
Income taxes (755)
-------
Pro forma net income $ 13,630
-------
Pro forma net income per share $ .62
-------
Weighted average number of shares of capital
stock used to calculate earnings per share 21,942
=======
The Tannehill Properties are adjacent to the Company's
homebase properties in the Midway-Sunset field in Kern County,
California. It is anticipated that the Company will be able to
reduce its operating cost per barrel due to economies of scale in
the field. The Company intends to implement a capital
expenditure program during 1997 of $2.4 million to further
develop the reserves, improve and integrate certain production
facilities, reduce operating costs per barrel and increase
production over the next year which, based upon current oil
prices, will have a significant positive impact on the Company's
operating results beginning in 1997.
9
Berry Petroleum Company
The Tannehill Properties
Supplemental Information About Oil & Gas Producing Activities
(Unaudited)
The following estimates of proved reserves, all developed
and located in California, represent interests purchased by the
Company from the Tannehill owners. Proved reserves represent
estimated quantities of crude oil and natural gas which
geological and engineering data demonstrate with reasonable
certainty to be recoverable in future years from known reservoirs
under existing economic and operating conditions. Proved
developed oil and gas reserves are the quantities expected to be
recovered through existing wells with existing equipment and
operating methods. Proved undeveloped oil and gas reserves are
expected to be recovered from new wells on undrilled acreage, or
from existing wells for which relatively major expenditures are
required for completion.
All of the reserves of the Tannehill Properties are crude
oil reserves and the estimates which follow are based on
estimates prepared by independent engineering consultants as of
December 31, 1996. Such estimates are subject to numerous
uncertainties inherent in the estimation of quantities of proved
reserves and in the projection of future rates of production and
the timing of development expenditures. These estimates do not
include probable or possible reserves. The applicable 1996
production and sales were added back for presentation of the
December 31, 1995 and September 30, 1996 reserve estimates.
10
Berry Petroleum Company
The Tannehill Properties
Supplemental Information About Oil & Gas Producing Activities
(Unaudited) (cont'd)
Changes in estimated reserve quantities:
The net interest in estimated quantities of proved developed
and undeveloped reserves of crude oil and natural gas at
September 30, 1996 and December 31, 1995, and changes in
quantities were as follows (in thousands of barrels):
Proved developed and
undeveloped reserves:
December 31, 1995 7,900
Less: production 373
------
September 30, 1996 7,527
======
Proved developed reserves:
December 31, 1995 7,900
======
September 30, 1996 7,527
======
Standardized measure of discounted future net cash flows
from estimated production of proved oil and gas reserves (in
thousands):
The standardized measure has been prepared assuming year-end
sales prices which were $18.85 per barrel, year-end costs, a ten
percent annual discount rate and statutory income tax rates
previously legislated adjusted for tax attributes directly
associated with the Tannehill properties. The tax rate used will
not necessarily be indicative of the effective tax rate of Berry
Petroleum Company taken as a whole. No deduction has been
made for depletion, depreciation or any direct costs such as
general corporate overhead or interest expense.
Future cash inflows $141,733
Future production and development costs 32,382
Future income tax expenses 32,805
_______
Future net cash flows 76,546
10% annual discount for estimated timing
of cash flows 37,814
_______
Standardized measure of discounted future
net cash flows - September 30, 1996 $ 38,732
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11
Berry Petroleum Company
The Tannehill Properties
Supplemental Information About Oil & Gas Producing Activities
(Unaudited) (cont'd)
Changes in standardized measure of discounted future net cash
flows from proved oil and gas reserves (in thousands):
Standardized measure - December 31, 1995 $ 35,649
Sales of oil produced, net of production costs (2,353)
Accretion of discount 3,977
Net change in income taxes 366
Other, net 1,093
-------
Standardized measure - September 30, 1996 $ 38,732
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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 hereunto duly authorized.
Date: January 30, 1997 BERRY PETROLEUM COMPANY,
a Delaware corporation
/s/ Ralph J. Goehring
By: Ralph J. Goehring,
Chief Financial Officer