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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 18, 2004
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)
1
Item 7. Regulation FD Disclosure
(c) Exhibits
The following Exhibits are hereby filed as part of this Current Report on
Form 8-K:
Exhibit 99.1 Press Release dated February 18, 2004 regarding the
Registrant's financial and operating results for the three months
and fiscal year ended December 31, 2003.
and
Item 12. Disclosure of Results of Operations and Financial Condition.
The information in this Form 8-K and the Exhibit attached hereto shall
not be deemed "filed" for purposes of Section 18 of the Securities Act
of 1934, nor shall it be deemed incorporated by reference in any filing
under the Securities Act of 1933, except as shall be expressly set forth
by specific reference in such filing.
On February 18, 2004, Berry Petroleum Company (Berry) announced financial
results for the three months and fiscal year ended December 31, 2003. A
copy of the news release announcing Berry's earnings results for three
months and twelve months ended December 31, 2003 is attached hereto as
Exhibit 99.1.
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 18, 2004
2
News Release
Berry Petroleum Company
Phone (661) 616-3900
5201 Truxtun Avenue, Suite 300
Bakersfield, California 93309-0640
E-mail: ir@bry.com
Internet: www.bry.com
Contacts: Jerry V. Hoffman, Chairman, President and CEO
Ralph J. Goehring, SVP & CFO
BERRY PETROLEUM ACHIEVES RECORD QUARTERLY
EARNINGS AND REPORTS 2003 RESULTS
Bakersfield, CA - February 18, 2004 - Berry Petroleum Company
(NYSE:BRY) announced record net income of $10.6 million, or $.48 per
diluted share, during the fourth quarter of 2003, an increase of 51%
compared to prior-year fourth quarter net income of $7 million, or
$.32 per diluted share. Net cash provided by operating activities
increased to $24.8 million during the fourth quarter, up 56% from
$15.9 million during the prior year's fourth quarter. Included in the
fourth quarter 2003 results is an after-tax charge of $.9 million, or
$.04 per diluted share, attributable to the impairment of the
Company's Illinois coalbed methane pilot which was determined to be
non-commercial.
Total production during the fourth quarter of 2003 averaged 18,550
barrels of oil equivalent (BOE) per day, a 22% increase from an
average of 15,208 BOE per day during the prior year's fourth quarter.
The Company injected a record volume of steam during the year which
contributed to record production from its California heavy oil
assets. California production averaged a new high in the fourth
quarter of 16,191 BOE per day while the Rockies assets contributed
2,359 BOE per day, or 13% of total fourth quarter production.
The average realized sales price for the fourth quarter of 2003 was
$22.68 per BOE, an 11% gain over the $20.41 per BOE received in the
same 2002 period. Total operating costs from oil and gas operations,
on a per BOE basis, for the fourth quarter of 2003 decreased 12% to
$9.00 from $10.17 in the same 2002 period. This is primarily due to
increased daily production in both California and Utah, and lower
operating costs provided by the Utah properties acquired in August
2003.
2003 Full Year Earnings and Operating Results
- ---------------------------------------------
Results for the full year of 2003 include net income of $34.3
million, or $1.56 per diluted share, up 14% compared to 2002 net
income of $30 million, or $1.37 per diluted share. Results for 2003
include after-tax charges of $2.3 million, or $.10 per diluted share,
attributable to the cost of two unsuccessful coalbed methane pilot
projects and associated leasehold acreage in Kansas and Illinois,
while results in 2002 include an after-tax gain of $2 million, or
$.09 per diluted share, on the recovery of receivables for
electricity sales that were written off by the Company in 2001. For
the full year of 2003, net income adjusted for significant items was
$36.6 million, or $1.66 per diluted share.
Total production in 2003 averaged 16,549 BOE per day, up 15% from
14,387 BOE per day in the previous year. The average realized sales
price per BOE was $22.52 for the twelve months ended December 31,
2003, up 16% from $19.39 per BOE received in 2002.
Total operating costs from oil and gas operations, on a per BOE
basis, rose 18% from $8.49 in 2002 to $10.05 in 2003 due to a 56%
increase in natural gas fuel cost and a 5% increase in steam injected
volumes. General and administrative costs per BOE rose 5% in 2003 to
$1.59, partially due to higher compensation expenses, the expansion
into the Rocky Mountain region, and a higher level of acquisition
activity.
Jerry V. Hoffman, chairman, president and chief executive officer
stated, "Our fourth quarter results capped another excellent year for
Berry in every sense. Record crude oil production from both our
California and Utah assets, the successful integration of the
Brundage Canyon, Utah acquisition and strong crude oil prices
contributed to our quarterly and annual accomplishments. That,
combined with the dedicated efforts of our employees, made this
another outstanding year for Berry. Record highs were achieved in the
fourth quarter for net income and net daily production. In 2003 we
achieved Company records for production which were driven by our
acquisitions and capital expenditures on our core properties. I
believe we are poised to achieve even better results in 2004 given a
full year of ownership and operation of our Utah assets, our expected
$50 million capital budget which should increase both California and
Rockies production, our cost control efforts and comparable commodity
prices."
Year-End Proved Reserves
- ------------------------
Including acquisitions, in 2003 Berry replaced 233% of its 2003
production of six million BOE at an average finding, development and
acquisition cost of $6.29 per BOE. Net proved reserve additions from
all sources in 2003 totaled approximately 8 million BOE, resulting in
a year-to-year increase of eight percent to 110 million BOE of proved
reserves. Berry's 2003 year-end reserves-to-production ratio was 15.5
years, reduced from 19.4 years at year-end 2002. Of the total 14
million BOE of proved reserves added by the Company in 2003,
acquisitions added 11 million BOE (79%), discoveries and extensions
added two million BOE (14%), and improved recovery added one million
BOE (7%). Proved developed reserves represent 80 million BOE or 73%
of total proved reserves. Since 1984, Berry has continuously engaged
DeGolyer and MacNaughton, petroleum consultants, to independently
appraise the extent and value of all hydrocarbon reserves of the
Company.
From 2001 through 2003, Berry's average annual reserve replacement
rate was 115%. At year-end 2003, the Company's reserve mix was 86%
heavy crude oil, 11% light crude oil and 3% natural gas, and
geographically, 91% in California and 9% in the Rocky Mountain
region.
The present value of estimated future net cash flows from Berry's
proved reserves, discounted at 10%, was $532 million at December 31,
2003, up $80 million or 18% from $452 million at December 31, 2002.
On a pre-tax basis, the present value of estimated future net cash
flows at December 31, 2003 was $687 million. These estimated future
net cash flows were calculated using the Company's unescalated year-
end average oil sales price per barrel of $25.77 and $24.92 for 2003
and 2002, respectively.
2004 Capex Budget & Production Target
- -------------------------------------
Excluding the purchase price of acquisitions, in 2003 the Company
spent approximately $42 million in capital expenditures, which
included the drilling of 121 net wells and completing 33 workovers.
Excluding any future acquisitions, in 2004 the Company plans to spend
approximately $50 million on drilling 95 wells and performing 85
workovers. Approximately $17 million will be spent in California to
drill approximately 44 wells and perform 63 workovers, and $33
million in the Rocky Mountain and Mid-Continent regions to drill
approximately 51 wells and perform 22 workovers. The Company intends
to fund its capital program out of internally generated cashflow. The
Company anticipates that production will average between 20,000 and
21,000 BOE per day in 2004, up over 20% from 16,549 BOE per day in
2003.
Ralph J. Goehring, senior vice president and chief financial officer,
stated, "From a financial perspective, Berry had an excellent 2003;
we achieved our second highest net income and net cash provided by
operating activities in the Company's history. Our 2003 net cash
provided by operating activities was $64.8 million, up 12% from $57.9
in 2002. We closed the year with only $50 million in debt, for a debt-
to-total-capitalization ratio of 20%, and as a result, we have
significant financial capacity available for growth. Our return on
capital employed was a healthy 17%. We also delivered an 18% increase
in cash payouts to our shareholders and increased our dividend
payment per share 10% on a going forward basis."
Teleconference Call
- -------------------
An earnings conference call will be held Wednesday, February 18, 2004
at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time). Dial 1-800-901-
5217 to participate, using passcode 32472070. International callers
may dial 617-786-2964. For a digital replay available until March 3,
2004 dial 1-888-286-8010 (passcode 43633297). 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/tele.htm.
Disclosure of Non-GAAP Financial Measures
- -----------------------------------------
The Company uses the following non-GAAP financial measures to analyze
its ongoing operating results and to monitor, assess, and identify
meaningful trends in its operating and financial performance:
* "net income adjusted for significant items";
* "net income per diluted share adjusted for significant items";
* "pre-tax measure of the present value of estimated future net
cash flows from proved reserves";
These measures reflect adjustments to GAAP basic and diluted net
income per share, for significant items specified herein that
management believes are unusual due to their nature or infrequency.
The Company believes that net income adjusted for significant items,
and basic and diluted net income per share adjusted for significant
items measurements are useful to investors because they reflect
adjustments for significant items that are unusual due to their
nature or infrequency, thereby permitting a meaningful comparison of
the Company's financial and operating performance between periods and
providing important information regarding performance trends.
The Company believes that the non-GAAP financial measures described
above are also useful to investors because these measurements are
used by many companies in the industry as a measurement of operating
and financial performance and are commonly employed by financial
analysts and others to evaluate the operating and financial
performance of the Company and to compare the operating and financial
performance of the Company with the performance of other companies
within the industry.
These non-GAAP financial measures may not be comparable to similarly
titled measurements used by other companies and should not be used as
a substitute for net income, earnings per share or other GAAP
operating measurements.
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:" 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 the commodity prices for oil,
natural gas and electricity, a limited marketplace for electricity
sales within California, counterparty risk, competition,
environmental and weather risks, litigation uncertainties, drilling,
development and operating risks, uncertainties about the estimates of
reserves, the availability of drilling rigs and other support
services, legislative and/or judicial decisions and other
governmental regulations.
CONDENSED INCOME STATEMENTS
(In thousands, except per share data)
(unaudited)
Three Months Twelve Months
12/31/03 12/31/02 12/31/03 12/31/02
Revenues:
Sales of oil and gas $ 38,562 $ 28,737 $135,848 $102,026
Sales of electricity 11,240 7,476 44,200 27,691
Interest and other income, net 219 36 816 1,652
Total 50,021 36,249 180,864 131,369
Expenses:
Operating costs - oil and gas 15,362 14,223 60,705 44,604
Operating costs - electricity 11,240 7,477 44,200 27,360
Depreciation, depletion
& amortization 6,164 4,056 20,514 16,452
General and administrative 2,923 1,757 9,586 7,928
Recovery of electricity
receivables - - - (3,631)
Dry hole, abandonment
& impairment 1,708 - 4,195 -
Interest 569 179 1,414 1,042
Total 37,966 27,692 140,614 93,755
Income before income taxes 12,055 8,557 40,250 37,614
Provision for income taxes 1,445 1,567 5,918 7,590
Net income $ 10,610 $ 6,990 $ 34,332 $ 30,024
Basic net income per share $.49 $.32 $1.58 $1.38
Diluted net income per share $.48 $.32 $1.56 $1.37
Cash dividends per share $.11 $.10 $.47 $.40
Weighted average common shares:
Basic 21,789 21,752 21,772 21,741
Diluted 22,113 21,952 22,020 21,939
CONDENSED BALANCE SHEETS
(In thousands)
12/31/03 12/31/02
Assets
Current assets $ 41,286 $ 28,705
Property, buildings & equipment, net 295,151 228,475
Other assets 1,755 893
$338,192 $258,073
Liabilities & Shareholders' Equity
Current liabilities $ 46,652 $ 32,394
Deferred taxes 38,168 33,866
Long-term debt 50,000 15,000
Other long-term liabilities 7,654 4,755
Shareholders' equity 195,718 172,058
$338,192 $258,073
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
Twelve Months
12/31/03 12/31/02
Cash flows from operating activities:
Net income $34,332 $30,024
Depreciation, depletion & amortization 20,514 16,452
Dry hole, abandonment & impairment 4,087 -
Deferred income taxes 1,371 3,842
Other, net 69 (184)
Net changes in operating assets and
liabilities 4,452 7,761
Net cash provided by operating
activities 64,825 57,895
Net cash used in investing activities (87,723) (36,526)
Net cash provided by (used in)
financing activities 23,690 (18,741)
Net increase in cash and cash equivalents 792 2,628
Cash and cash equivalents at
beginning of year 9,866 7,238
Cash and cash equivalents at end of period $10,658 $ 9,866
COMPARATIVE OPERATING STATISTICS
(unaudited)
Three Months Twelve Months
12/31/03 12/31/02 Change 12/31/03 12/31/02 Change
Oil and gas:
Net production-BOE per day 18,550 15,208 +22% 16,549 14,387 +15%
Per BOE:
Average realized
sales price $22.68 $20.41 +11% $22.52 $19.39 +16%
Operating costs 8.19 9.57 -14% 9.41 7.94 +19%
Production taxes .81 .60 +35% .64 .55 +16%
Total operating costs 9.00 10.17 -12% 10.05 8.49 +18%
Depreciation & depletion 3.61 2.90 +24% 3.40 3.13 +9%
General & administrative
expenses 1.71 1.26 +36% 1.59 1.51 +5%
Interest expense $ .33 $ .13 +154% $ .23 $ .20 +15%
Electricity:
Electric power produced -
Megawatt hours/day 2,101 2,126 -1% 2,100 2,050 +2%
Electric power sold -
Megawatt hours/day 1,964 1,860 +6% 1,925 1,848 +4%
Average sales price - $/MWh $62.20 $43.97 +41% $62.91 $40.06 +57%
Natural gas cost - $/MMBtu $ 4.37 $ 3.99 +10% $ 4.88 $ 3.13 +56%
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