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): February 22, 2006 (February 22,
2006)
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 February
22, 2006, Berry Petroleum Company issued a news release announcing its financial
results for its fourth fiscal quarter and full fiscal year
ended December 31, 2005. The information contained in the press release is
incorporated herein by reference and furnished as Exhibit 99.1.
The
information in this Current Report on Form 8-K and Exhibit 99.1 is being
furnished and shall not be deemed "filed" for the purposes of Section 18
of the
Securities Exchange Act of 1934, as amended, or otherwise subject to the
liabilities of that Section.
Item 9.01 Financial
Statements and Exhibits
(c)
Exhibits
99.1
News
Release by Berry Petroleum Company dated February 22, 2006, titled "Berry
Petroleum’s 2005 Earnings Climb 62% To $5.00 Per Share; Production, Reserves
Also Reach Record Highs" announcing
the Registrant's financial results for the fourth fiscal quarter and full
fiscal year ended December 31, 2005.
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: February
22, 2006
-
2
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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
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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’S 2005 EARNINGS CLIMB 62% TO $5.00 PER SHARE; PRODUCTION,
RESERVES ALSO REACH RECORD HIGHS
Bakersfield,
CA - February 22, 2006 -
Berry
Petroleum Company (NYSE:BRY) earned $30.4 million, or $1.35 per diluted share,
in the fourth quarter of 2005, which was 20% higher than the $25.3 million,
or
$1.11 per diluted share, the Company achieved in the fourth quarter of 2004.
For
2005,
the Company achieved record net income of $112.4 million, or $5.00 per diluted
share, an increase of 62% compared to 2004 net income of $69.2 million, or
$3.08
per diluted share, according to Robert F. Heinemann, president and chief
executive officer.
Berry
continued its transformation of diversifying its resource base in 2005 by adding
a new core natural gas operating area and through solid execution of its active
drilling program. The Company’s activities and strong commodity pricing
generated powerful results with the following ten records set in
2005:
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· Average
production:
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23,015
BOE per day
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12%
increase over 2004
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· Revenues:
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$407
million
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48%
increase over 2004
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· Cash
flow from operations:
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$188
million
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50%
increase over 2004
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· Net
income:
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$112
million
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62%
increase over 2004
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· Capital
expenditures:
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$131
million
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82%
increase over 2004
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· Acquisitions:
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$112
million
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versus
$3 million 2004
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· Reserve
additions:
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24.9
million BOE
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236%
increase over 2004
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· Price
realization:
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$41.62/BOE
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37%
increase over 2004
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· Dividend
distributions:
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$13.2
million
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16%
increase over 2004
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· Return
on capital employed:
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33%
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versus
26% in 2004
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Mr.
Heinemann commented, “The story behind the revenue, cash flow and earnings
records in 2005 was our ability to increase production by 12% to a record 23,015
BOE per day (or 8.4 million BOE for the year) and realization of excellent
commodity prices, achieving $41.62 per BOE, up 37% from the average BOE realized
price in 2004 of $30.32. Our overall 2005 performance benefited from accelerated
execution of our drilling programs, and the acquisition and successful
integration of our Colorado Niobrara gas assets acquired in the first quarter
of
2005. In 2005, we incurred $243 million in total capital expenditures; $119
million in development and exploration, $112 million in acquisitions and $12
million in the purchase of rigs and other assets.
“Our
focus on capital efficiency generated a stellar return on capital of 33% for
2005. We added approximately 25 million BOE in reserves for a reserve
replacement rate of 296%. We had an extremely active and well-coordinated year
in drilling and field operations in which we drilled 188 new wells and 140
well
workovers with only 6 dry holes. We accomplished this while maintaining an
excellent safety record and on February 5, 2006, we achieved over 1,000,000
man
hours of operations without a lost-time incident. This major milestone was
accomplished over a three year period of time.
“In
2005,
we added the eastern Colorado Niobrara assets as a new core area and expanded
this acreage position by adding another 434,000 gross acres (191,000 net) in
the
Tri-State area (Colorado, Kansas and Nebraska) to our prospective inventory
and
we added 186,000 gross acres (46,000 net) in the North Dakota Bakken light
oil
play. In 2005, we focused our exploration and appraisal activities on three
potentially very significant areas or projects. These were:
| 1) |
Lake
Canyon - Green River Formation.
We
drilled two exploratory wells about three miles west of our producing
Brundage Canyon property into our 169,000 untested acreage block.
Both
wells discovered hydrocarbons and we announced initial results in
January
of 2006. These wells indicate that the Green River Formation continues
to
be productive to the west of Brundage Canyon. We are adding a gas
pipeline
to the area to produce the associated gas and are proceeding with
the next
four wells. We are preparing for a 30 well program if results from
these
four wells are satisfactory.
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| 2) |
Coyote
Flats.
We
continue to drill our obligation wells to earn our 50% WI in the
69,000
gross acres. We have drilled an offset well to the discovery well
and a
second Ferron well about three miles south of the discovery well.
We are
testing both wells and are pleased with the early results. We are
adding
pipeline access to achieve gas sales in
mid-summer.
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| 3) |
Diatomite.
We
are seeing encouraging results with production nearing 300 barrels
per
day. We expanded our initial pilot program by drilling another 25
wells
(15 producers) in the fourth quarter of 2005. While this activity
reduced
our production from the diatomite in the fourth quarter, it sets
the stage
for pressure build-up and increased production in the first half
of 2006.
Upon satisfactory results, we are ready to proceed with another 50
well
program later in 2006.”
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Mr.
Heinemann continued, “We will continue to actively explore and appraise our
large prospective acreage positions in a decisive manner. With these early
successes, we are very focused on an efficient execution of our record $190
million capital program for 2006. Our new production target for 2006 is 25,800
BOE per day which is another 12% increase in production over 2005, and upon
achievement, will be our fourth consecutive year of double-digit production
growth. This target includes our announced Piceance Basin acquisition which
is
scheduled to close by March 1, 2006.”
1
Berry
Petroleum Company News Release - February 22, 2006
Oil
and Natural Gas Production & Pricing
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Annual
Production
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2005
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%
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2004
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%
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2003
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%
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Oil
and Gas
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Heavy
Oil Production (Bbl/D)
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16,063
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70
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15,901
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77
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15,477
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94
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Light
Oil Production (Bbl/D)
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3,336
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14
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3,345
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16
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489
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3
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Total
Oil Production (Bbl/D)
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19,399
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84
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19,246
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93
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15,966
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97
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Natural
Gas Production (Mcf/D)
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21,696
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16
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7,752
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7
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3,499
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3
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Total
(BOE/D)
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23,015
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100
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20,537
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100
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16,549
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100
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Percentage
increase from prior year
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12%
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24%
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15%
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For
the
full-year of 2005,
California production averaged 16,156 BOE per day (70%) while the Rockies assets
contributed 5,259 BOE per day (23%), and the Mid-Continent assets contributed
1,600 BOE per day (7%) of the Company’s total 2005 production.
The
average realized sales price net of hedging for the full-year 2005 was $41.62
per BOE, up 37% over the $30.32 per BOE received in the 2004 period.
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Fourth
Quarter Production
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Q4
2005
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%
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Q4
2004
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%
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Q4
2003
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%
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Oil
and Gas
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Heavy
Oil Production (Bbl/D)
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15,997
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68
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16,174
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76
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16,088
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87
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Light
Oil Production (Bbl/D)
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3,438
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14
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3,722
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17
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1,582
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9
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Total
Oil Production (Bbl/D)
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19,435
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82
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19,896
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93
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17,670
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96
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Natural
Gas Production (Mcf/D)
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25,428
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18
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9,084
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7
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5,280
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4
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Total
(BOE/D)
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23,673
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100
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21,410
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100
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18,550
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100
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Percentage
increase from prior quarter
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11%
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15%
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21%
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For
the
fourth quarter of 2005,
California production averaged 16,080 BOE per day (68%) while the Rockies assets
contributed 5,605 BOE per day (24%), and the Mid-Continent assets contributed
1,988 BOE per day (8%) of the Company’s total fourth quarter
production.
The
average realized sales price after hedging for the fourth quarter of 2005 was
$44.90 per BOE, a 30% gain over the $34.62 per BOE received in the same 2004
period.
Ralph
J.
Goehring, executive vice president and chief financial officer, stated, “Net
cash provided by operating activities increased to a record $65.5 million during
the fourth quarter, up 42% from $46.1 million during the prior year’s fourth
quarter. Net cash provided by operating activities increased to a record $188
million during the full-year 2005, up 50% from $125 million in 2004. We are
well
positioned to continue our growth story as we have significant financial
capacity to execute value-adding acquisitions that meet our strategy and will
remain disciplined in our capital expenditures and operational focus. We are
off
to a good start as we add another major core area, the Piceance Basin (pending
closing), to our growing list of operated sizable acreage positions. We expect
2006 to be another exciting and rewarding year for Berry and our
shareholders.”
Teleconference
Call
An
earnings conference call will be held Wednesday, February 22, 2006 at 1:30
p.m.
Eastern Time (10:30 a.m. Pacific Time). Dial 1-866-825-1709 to participate,
using passcode 23263458. International callers may dial 617-213-8060. For a
digital replay available until March 7, 2005 dial 1-888-286-8010 (passcode
30001789). 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 and a
regional office in Denver, Colorado.
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. Words such
as
“will,”
“preparing,” “appraise,” “continue,” “target,” “expect,” and
others indicate forward-looking statements and important factors which could
affect actual results are discussed in Part II of Berry’s Form 10-K filed with
the Securities and Exchange Commission, under the heading “Other Factors
Affecting the Company's Business and Financial Results" in the section titled
"Management’s Discussion and Analysis of Financial Condition and Results of
Operations.”
2
Berry
Petroleum Company News Release - February 22, 2006
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CONDENSED
INCOME STATEMENTS
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|||||||||||||
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(In
thousands, except per share data)
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|||||||||||||
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(unaudited)
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|||||||||||||
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Three
Months
|
Twelve
Months
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||||||||||||
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12/31/05
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12/31/04
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12/31/05
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12/31/04
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||||||||||
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Revenues
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|||||||||||||
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Sales
of oil and gas
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$
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97,055
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$
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67,356
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$
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349,691
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$
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226,876
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Sales
of electricity
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18,328
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13,075
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55,230
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47,644
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|||||||||
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Interest
and other income, net
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674
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89
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1,804
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426
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|||||||||
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Total
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116,057
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80,520
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406,725
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274,946
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|||||||||
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Expenses
|
|||||||||||||
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Operating
costs - oil &
gas
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29,710
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23,481
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99,066
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75,988
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|||||||||
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Operating
costs - electricity
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18,490
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12,776
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55,086
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46,191
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|||||||||
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Production
taxes
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2,937
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217
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11,506
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6,431
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|||||||||
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Exploration
costs
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2,114
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-
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3,649
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-
|
|||||||||
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Depreciation,
depletion & amortization - oil & gas
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11,350
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8,255
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38,150
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29,752
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|||||||||
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Depreciation,
depletion & amortization - electricity
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816
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951
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3,260
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3,490
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|||||||||
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General
and
administrative
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5,408
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3,398
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21,396
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20,354
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|||||||||
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Loss
on disposal of assets
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-
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410
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-
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410
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Dry
hole, abandonment & impairment
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280
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745
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5,705
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745
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|||||||||
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Interest
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1,547
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490
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6,048
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2,067
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|||||||||
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Total
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72,652
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50,723
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243,866
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185,428
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|||||||||
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|
|||||||||||||
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Income
before income
taxes
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43,405
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29,797
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162,859
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89,518
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|||||||||
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Provision
for income
taxes
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13,033
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4,481
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50,503
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20,331
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|||||||||
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|
|||||||||||||
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Net
income
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$
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30,372
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$
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25,316
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$
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112,356
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$
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69,187
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|||||
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|||||||||||||
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Basic
net income per
share
|
$
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1.39
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$
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1.15
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$
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5.10
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$
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3.16
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|||||
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Diluted
net income per
share
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$
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1.35
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$
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1.11
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$
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5.00
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$
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3.08
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|||||
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Cash
dividends per
share
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$
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0.13
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$
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0.12
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$
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.60
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$
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.52
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|||||
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|||||||||||||
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Weighted
average common shares:
|
|||||||||||||
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Basic
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22,048
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21,949
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22,041
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21,894
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|||||||||
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Diluted
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22,496
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22,670
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22,490
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22,470
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|||||||||
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CONDENSED
BALANCE SHEETS
|
|||||||
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(In
thousands)
|
|||||||
|
(unaudited)
|
|||||||
|
12/31/05
|
12/31/04
|
||||||
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Assets
|
|||||||
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Current
assets
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$
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74,886
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$
|
61,001
|
|||
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Property,
buildings & equipment, net
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552,984
|
338,706
|
|||||
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Other
assets
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7,181
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12,397
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|||||
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$
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635,051
|
$
|
412,104
|
||||
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Liabilities
& Shareholders’ Equity
|
|||||||
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Current
liabilities
|
$
|
129,643
|
$
|
64,841
|
|||
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Deferred
taxes
|
55,804
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47,963
|
|||||
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Long-term
debt
|
75,000
|
28,000
|
|||||
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Other
long-term liabilities
|
40,394
|
8,214
|
|||||
|
Shareholders’
equity
|
334,210
|
263,086
|
|||||
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|
$
|
635,051
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$
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412,104
|
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3
Berry
Petroleum Company News Release - February 22, 2006
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CONDENSED
STATEMENTS OF CASH FLOWS
|
|||||||
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(In
thousands)
|
|||||||
|
(unaudited)
|
|||||||
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Twelve
Months
|
|||||||
|
12/31/05
|
12/31/04
|
||||||
|
Cash
flows from operating activities:
|
|||||||
|
Net
income
|
$
|
112,356
|
$
|
69,187
|
|||
|
Depreciation,
depletion & amortization (DD&A)
|
41,409
|
33,242
|
|||||
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Dry
hole, abandonment & impairment
|
4,324
|
(569
|
)
|
||||
|
Deferred
income taxes
|
20,847
|
10,815
|
|||||
|
Stock
based compensation
|
1,703
|
5,309
|
|||||
|
Other,
net
|
278
|
794
|
|||||
|
Net
changes in operating assets and liabilities
|
6,863
|
5,835
|
|||||
|
Net
cash provided by operating activities
|
187,780
|
124,613
|
|||||
|
Net
cash used in investing activities
|
(242,599
|
)
|
(85,187
|
)
|
|||
|
Net
cash provided by (used in) financing activities
|
40,119
|
(33,394
|
)
|
||||
|
Net
(decrease) increase in cash and cash equivalents
|
(14,700
|
)
|
6,032
|
||||
|
Cash
and cash equivalents at beginning of year
|
16,690
|
10,658
|
|||||
|
Cash
and cash equivalents at end of period
|
$
|
1,990
|
$
|
16,690
|
|||
|
COMPARATIVE
OPERATING STATISTICS
|
|||||||||||||||||||
|
(unaudited)
|
|||||||||||||||||||
|
Three
Months
|
Twelve
Months
|
||||||||||||||||||
|
|
12/31/05
|
12/31/04
|
Change
|
12/31/05
|
12/31/04
|
Change
|
|||||||||||||
|
Oil
and gas:
|
|||||||||||||||||||
|
Net production-BOE
per day
|
23,673
|
21,410
|
+11
|
%
|
23,015
|
20,537
|
+12
|
%
|
|||||||||||
|
Per
BOE:
|
|||||||||||||||||||
|
Average
sales price before hedges
|
$
|
51.71
|
$
|
39.54
|
+31
|
%
|
$
|
47.01
|
$
|
33.64
|
+40
|
%
|
|||||||
|
Average
sales price after hedges
|
$
|
44.90
|
$
|
34.62
|
+30
|
%
|
$
|
41.62
|
$
|
30.32
|
+37
|
%
|
|||||||
|
Operating
costs
|
13.66
|
11.03
|
+24
|
%
|
11.79
|
10.10
|
+17
|
%
|
|||||||||||
|
Production
taxes
|
1.35
|
.11
|
+1,127
|
%
|
1.37
|
.86
|
+59
|
%
|
|||||||||||
|
Total
operating costs
|
15.01
|
11.14
|
+35
|
%
|
13.16
|
10.96
|
+20
|
%
|
|||||||||||
|
DD&A -
oil and
gas
|
5.22
|
4.19
|
+25
|
%
|
4.54
|
3.96
|
+15
|
%
|
|||||||||||
|
General
& administrative expenses
|
2.49
|
2.62
|
-5
|
%
|
2.55
|
2.71
|
-6
|
%
|
|||||||||||
|
|
|||||||||||||||||||
|
Interest
expense
|
$
|
.71
|
$
|
.23
|
+209
|
%
|
$
|
.72
|
$
|
.27
|
+167
|
%
|
|||||||
#
#
#