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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) February 13, 2003
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)
5201 Truxtun Avenue, Suite 300 Bakersfield, CA 93309
(Address of principal executive offices)
Registrant's telephone number, including area code (661) 616-3900
N/A
(Former name or former address, if changed since last report)
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Item 5. Other Events
On February 13, 2003, Berry Petroleum Company, a Delaware
corporation, issued a press release, a copy of which is attached hereto
as Exhibit 99.1 and is incorporated herein by reference.
Item 7. Financial Statements, Proforma Financial Information
and Exhibits
Exhibits
99.1 Press Release of Berry Petroleum Company dated
February 13, 2003.
SIGNATURE
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 thereunto duly authorized.
BERRY PETROLEUM COMPANY
By /s/ Kenneth A. Olson
Name: Kenneth A. Olson
Title: Corporate Secretary and Treasurer
February 13, 2003
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News Release
Berry Petroleum Company Phone (661) 616-3900
5201 Truxtun Avenue, Suite 300 E-mail: ir@bry.com
Bakersfield, California 93309-0640
Internet:www.bry.com NYSE:BRY
Contacts: Jerry V. Hoffman, Chairman, President & CEO
Ralph J. Goehring, Senior Vice President & CFO
February 13, 2003 For Immediate Release
BERRY PETROLEUM'S 2002 EARNINGS
ROSE 37% IN 2002 TO $30 MILLION
Bakersfield, California - Berry Petroleum Company (NYSE:BRY)
today announced net income of $30 million, or $1.38 per share,
(basic) on revenues of $132.6 million for the year ended
December 31, 2002, up 37% from $21.9 million, or $1.00 per share
(basic), on revenues of $138.5 million for the year ended
December 31, 2001. These results represent Berry's second
highest net income ever. Net income for 2001 was adversely
affected by a $4 million after-tax charge for the write-off
of electrical receivables deemed uncollectable. However, in
the first quarter of 2002, a portion of those proceeds were
collected resulting in a $2.2 million after-tax credit. Total
production for 2002 was 5.3 million barrels of oil equivalent
(BOE), or 14,387 BOE/day, up 4% from 5 million BOE, or 13,820
BOE/day, in 2001. The average sales price/BOE received in 2002
was $19.39, down 2% from $19.79 received during 2001.
For the fourth quarter of 2002, the Company earned $7 million,
or $.32 per share (basic), on revenues of $36.7 million.
This was up 75% from $4 million, or $.19 per share (basic) earned
in the fourth quarter of 2001 on revenues of $27.5 million, but
down 8% from $7.6 million, or $.35 per share (basic) earned in
the third quarter of 2002 on revenues of $35.3 million. Total
production for the fourth quarter of 2002 was 1.4 million BOE, or
15,208 BOE/day, up 13% from 1.2 million BOE, or 13,444 BOE/day in
the fourth quarter of 2001 and up 5% from 1.3 million BOE, or
14,464 BOE/day, in the third quarter of 2002. The average sales
price/BOE received in the fourth quarter of 2002 was $20.41, up
32% from $15.51 received in the fourth quarter of 2001 and down
3% from $21.03 received in the third quarter of 2002.
Jerry Hoffman, Chairman, President and Chief Executive
Officer, stated "2002 was another solid year for the Company as
we achieved a 17% return on capital employed (our three-year
average is 18%), and an 18% return on equity (our three-year
average is 21%). Production rates were decreased significantly
in 2001 due to the suspension of our steam operations as a result
of the California energy crisis. Our most important goal for
2002 was to re-establish production rates from our core assets to
the levels achieved before the steam interruption. This goal was
largely achieved in 2002 with a production exit rate for 2002 of
approximately 15,700 BOE/day. Excluding property acquisitions,
the Company's 2003 capital budget for additional development of
our core properties is $27.6 million, which is down 10% from 2002
capital expenditures. We also expect our steaming operations to
rise to levels near 67,000 barrels of steam per day to support
our increasing production. Our target average production rate
from our existing producing properties for 2003 is 16,400 BOE/day,
up 14% from our 2002 average production rate of 14,387 BOE/day
and we expect to exit 2003 at 17,700 BOE/day."
Operating costs ($/BOE) were $8.49 in 2002, up 6% from $7.99
in 2001. Operating expenses for the fourth quarter of 2002 were
$10.17, up 44% from the fourth quarter of 2001. The primary
reason for
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Berry Petroleum Company News Release - February 13, 2003 Page 2
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the increase was high steam costs due to high gas prices, low
electricity prices and high volumes of steam from our conven-
tional generators. The average cost of natural gas purchases
in 2002 was $3.13 per Mmbtu, down from $5.76 in 2001. The
average price for the fourth quarter was $3.99 and the current
cost of delivered gas is $4.92 per Mmbtu. Total steam injected
in 2002 was 21.9 million barrels, up 78% from 12.3 million
barrels in 2001. The average sales price per megawatt of
electricity was $40.06 in 2002, down from $79.14 in 2001.
Management anticipates that operating costs will increase to a
range of approximately $8.50 - $9.50 per BOE in 2003 due to high
steaming operations and relatively high natural gas prices.
During 2002, the majority of the Company's electricity was
sold on the open market. However, in January 2003, Berry began
delivery of electricity under reinstated Standard Offer contracts
with Pacific Gas and Electric Company and Southern California
Edison Company, which should result in improved electrical
pricing and contribute to lower operating costs for the Company's
crude oil production operations. These contracts are scheduled
to terminate no later than December 31, 2003. Management will
pursue extensions or other longer-term contracts at competitive
rates for 2004 and beyond.
General and administrative expenses (G&A) in 2002 were $7.9
million, or $1.51 per BOE, up 6% from $7.2 million, or $1.42 per
BOE, in 2001. The increase from 2001 was primarily due to costs
related to the evaluation of potential acquisitions and rent on
the Company's corporate offices. The Company is targeting 2003
G&A costs of approximately $1.50 per BOE.
Ralph Goehring, Senior Vice President and Chief Financial
Officer, said, "The Company generated a very healthy $57.9
million in cash from operations, up 64% from $35.4 million,
in 2001. In the fourth quarter of 2002, Berry adopted
SFAS No. 143, "Accounting for Asset Retirement Obligations."
The Company has recorded costs for the ultimate abandonment of
our wells and facilities for many years under SFAS No. 19 and
the effect of the change on 2002 earnings was immaterial.
The effect on earnings in 2003 under the newly adopted method
will be a charge of approximately $.5 million compared to a
charge of approximately $.8 million under the previous method.
The most significant effect of the change was to move the
current accumulated financial obligation to a long-term
liability account. The value of this obligation under our
previous method had been recorded as a reduction to the total
book value of the Company's property, plant and equipment. The
accrued abandonment obligation at December 31, 2002 was $4.6
million."
The present value of estimated future net cash flows from
Berry's proved reserves, discounted at 10%, was $452 million at
December 31, 2002, up 61% from $280 million in 2001. These
estimated cash flows were calculated using an unescalated year-
end average oil sales price of $24.16 and $14.18 for 2002 and
2001, respectively. Total oil and gas reserves at December 31,
2002 were 101.7 million barrels, down slightly from 102.9 million
barrels in 2001. Therefore, the Company replaced 4.1 million
barrels, or 77%, of its production in 2002.
Jerry Hoffman stated, "While we had a good year financially
in 2002, the acquisition environment was, and remains, difficult
due primarily to high commodity pricing. However, the Company
acquired significant acreage positions in Kansas and Illinois and
is in the process of evaluating the development potential of
coalbed methane production as part of our plan to diversify
Berry's resource base with natural gas production. For 2003, our
most important goal is to leverage our excellent balance sheet
into growth assets and add a new core area for the Company
outside California. We are targeting the U.S. Rockies and the
Mid-continent and have established an office in Denver, Colorado
to provide improved access to the available opportunities."
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Berry Petroleum Company News Release - February 13, 2003 Page 3
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An earnings conference call will be held February 14, 2003
at 8:00 a.m. PT. Dial 800-218-0713 to participate. For a digital
replay, dial 800-405-2236 (passcode 522795). The digital replay
will be available until February 28, 2003 at 11:59 p.m. PT. A
webcast is available at www.bry.com.
Berry Petroleum Company is a publicly traded independent oil
and gas production and exploitation company with headquarters in
Bakersfield, California. Visit www.bry.com for more information.
"Safe harbor under the Private Securities Litigation Reform Act
of 1995:" With the exception of historical information, the
matters discussed in this news release are forward-looking
statements that involve risks and uncertainties. Although the
Company believes that its expectations are based on reasonable
assumptions, it can give no assurance that its goals will be
achieved. Important factors that could cause actual results to
differ materially from those in the forward-looking statements
herein include, but are not limited to, the timing and extent of
changes in commodity prices for oil, gas and electricity, a
limited marketplace for electricity sales within California,
counterparty risk, competition, environmental risks, litigation
uncertainties, drilling, development and operating risks, the
availability of drilling rigs and other support services,
legislative and/or judicial decisions and other government
regulations.
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Berry Petroleum Company News Release - February 13, 2003 Page 4
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CONDENSED STATEMENTS OF INCOME
(In thousands, except per share data)
(unaudited)
Three Months Ended Twelve Months Ended
12/31/02 12/31/01 12/31/02 12/31/01
Revenues:
Sales of oil and gas $ 28,736 $ 19,278 $102,026 $100,146
Sales of electricity 7,865 7,829 28,827 35,917
Interest and other
income, net 147 372 1,762 2,478
------- ------- ------- -------
Total 36,748 27,479 132,615 138,541
Expenses:
Operating costs - oil
and gas production 14,223 8,714 44,604 40,281
Operating costs -
electricity generation 7,865 7,616 28,496 35,506
Depreciation, depletion
& amortization 4,056 3,982 16,452 16,520
General & administrative 1,758 1,692 7,928 7,174
Interest 179 448 1,042 3,719
Write-off (recovery) of
electricity receivable - - (3,631) 6,645
Loss on termination of
derivative contracts - 1,458 - 1,458
------- ------- ------- -------
Total 28,081 23,910 94,891 111,303
Income before income
taxes 8,667 3,569 37,724 27,238
Provision (benefit)for
income taxes 1,611 (480) 7,634 5,300
------- ------- ------- -------
Net income before
accounting change $ 7,056 $ 4,049 $ 30,090 $ 21,938
Effect of accounting
change, net of taxes (66) - (66) -
------- ------- ------- -------
Net income $ 6,990 $ 4,049 $ 30,024 $ 21,938
======= ======= ======= =======
Basic net income
per share $ .32 $ .19 $ 1.38 $ 1.00
Diluted net income
per share $ .32 $ .18 $ 1.37 $ .99
Cash dividends
per share $ .10 $ .10 $ .40 $ .40
Weighted average common
shares:
Basic 21,752 21,791 21,741 21,973
Diluted 21,952 22,000 21,939 22,110
CONDENSED BALANCE SHEETS
(In thousands)
December 31, 2002 December 31, 2001
ASSETS
Current assets $ 28,705 $ 28,201
Property & equipment, net 228,475 203,413
Other assets 893 912
------- -------
$ 258,073 $ 232,526
======= =======
LIABILITIES & SHAREHOLDERS' EQUITY
Current liabilities $ 32,394 $ 22,364
Long-term debt 15,000 25,000
Deferred taxes 33,866 32,009
Other long-term liabilities 4,755 -
Shareholders' equity 172,058 153,153
------- -------
$ 258,073 $ 232,526
======= =======
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Berry Petroleum Company News Release - February 13, 2003 Page 5
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CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
Year Ended
12/31/02 12/31/01
Cash flows from operations:
Net income $ 30,024 $ 21,938
Depreciation, depletion &
amortization 16,452 16,520
Increase (decrease) in deferred
income taxes 1,857 (50)
Other, net (184) (505)
Net changes in operating assets
and liabilities 9,746 (2,470)
------- -------
Net cash provided by operations 57,895 35,433
Net cash used in investing activities (36,526) (17,029)
Net cash used in financing activities (18,741) (13,897)
Net increase in cash & cash
equivalents 2,628 4,507
Cash & cash equivalents, beginning
of period 7,238 2,731
Cash & cash equivalents, end of
period $ 9,866 $ 7,238
COMPARATIVE OPERATING STATISTICS
Three Months Ended Year Ended
12/31 12/31 Change 12/31 12/31 Change
Oil & Gas /02 /01 /02 /01
Net production-BOE/D 15,208 13,444 +13% 14,387 13,820 +4%
Per BOE:
Average sales price $20.41 $15.51 +32% $19.39 $19.79 -2%
Operating costs* 9.57 6.50 +47% 7.94 7.50 +6%
Production taxes .60 .55 +9% .55 .49 +12%
Total operating costs 10.17 7.05 +44% 8.49 7.99 +6%
Depreciation/
depletion 2.90 3.22 -10% 3.13 3.28 -5%
General &
administrative
expenses 1.26 1.37 -8% 1.51 1.42 +6%
Interest expense $ .13 $ .36 -64% $ .20 $ .74 -73%
Electricity
Net megawatts per
day produced 2,126 1,936 +10% 2,050 1,325 +55%
Net megawatts per
day sold 1,860 1,821 +2% 1,848 1,245 +48%
Average sales price
per megawatt $43.97 $43.92 -% $40.06 $79.14 -49%
Fuel gas cost per
Mmbtu $ 3.99 $ 2.44 +64% $ 3.13 $ 5.76 -46%
*Excluding production taxes
BOE/D - Barrels of oil equivalent per day.
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