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): May 9, 2006 (May 9, 2006)
BERRY
PETROLEUM COMPANY
(Exact
Name of Registrant as Specified in its Charter)
|
|
|
|
|
|
|
DELAWARE
(State
or Other Jurisdiction of
Incorporation
or Organization)
|
|
1-9735
(Commission
File Number)
|
|
77-0079387
(IRS
Employer
Identification
Number)
|
|
|
|
|
|
5201
TRUXTUN AVE., STE. 300, BAKERSFIELD, CA
(Address
of Principal Executive Offices)
|
|
93309
(Zip
Code)
|
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))
-
1
-
Item 2.02 Results
of Operations and Financial Condition
On May
9, 2006, Berry
Petroleum Company issued a news release announcing its financial
and operational results for the first quarter ended March 31, 2006. The
information contained in the news 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 May 9, 2006, titled
"Berry Petroleum Reports First Quarter 2006 Results" announcing the
Registrant's results for the quarter ended March 31,
2006.
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.
|
|
|
|
|
|
|
|
BERRY
PETROLEUM COMPANY
|
|
||
|
|
By:
|
/s/
Kenneth A. Olson
|
|
|
|
|
|
Kenneth
A. Olson
|
|
|
|
|
|
Corporate
Secretary
|
|
|
|
|
||||
Date: May
9, 2006
-
2
-
|
|
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
|
 |
|
Contacts:
Robert F. Heinemann, President and CEO - - Ralph J. Goehring, Executive
Vice President and CFO
|
||
BERRY
PETROLEUM REPORTS FIRST QUARTER 2006 RESULTS
Bakersfield,
CA - May 9, 2006
- Berry
Petroleum Company (NYSE:BRY) earned $23.3 million, or $1.03 per diluted
share,
for the first quarter of 2006, up 4% from net income of $22.5 million,
or $1.00
per diluted share, in the first quarter of 2005. Revenues were $118
million and
discretionary cash flow was $55.6 million, up 34% and 50%, respectively,
both
record levels, compared to the results from the first quarter of 2005
The
Company’s daily production averaged 23,461 barrels of oil equivalent per day
(BOE/D), an increase of 6% over a year ago. The average realized sales
price of
$48.45 per BOE was up 28% from the $37.81 per BOE achieved in the first
quarter
of 2005. Berry’s first quarter results were negatively impacted, on a pre-tax
basis, by a $5.2 million charge for dry holes and a $4.8 million non-cash
charge
related to the Company’s natural gas derivative position, according to Robert F.
Heinemann, president and chief executive officer.
Mr.
Heinemann stated, “The first quarter of 2006 was extremely important to Berry
Petroleum as we continue to accelerate the change of the Company with
our
acquisition and development strategy. At the end of February, we completed
the
acquisition of a 50% working interest in the Grand Valley gas field
in the
Piceance Basin for $159 million, and have targeted approximately $50
million in
capital for the development of that asset this year. We have completed
seven
wells
since the acquisition with initial test rates per well between 1.3
and 2 million
cubic feet per day (MMcf/D). These results are consistent with our
acquisition
metrics. In total we are currently producing over 4 MMcf/D (net) from
the
Williams Fork member of the Mesaverde formation from 10 wells and are
on
schedule to drill a total of 35 wells in 2006 on this new core area.
The
addition of this Piceance Basin resource position is a major step for
Berry as
we diversify our resource base with high-quality natural gas assets
and improve
our oil to gas production profile.
“In
the
Uinta Basin, we announced two successful oil wells on our Lake Canyon
acreage in
January. These wells tested at 163 BOE/D and 103 BOE/D, respectively,
confirming
the presence of oil in the Green River formations west of Brundage
Canyon. The
shallow gas potential of these wells from the upper reservoirs is currently
being tested, and we have completed the tie-in of a gas pipeline to
this area.
We anticipate drilling four shallow confirmation wells at Lake Canyon
beginning
in June. Berry was also active on the Coyote Flats acreage, consistent
with our
goal of appraising our prospects in an expedient manner. We recently
announced
two successful Ferron well tests with production rates similar to the
original
discovery well located on the eastern side of the tract, and drilled
two dry
holes in the quarter.
“In
California for the first quarter, we focused on drilling additional
horizontal
wells and maximizing the overall benefits of our steam injection in
our cyclic
operations and our new steam floods. We tested a new steam injection
plan that
attempts to heat a broader region surrounding the wells in our South
Midway-Sunset properties compared to our previous single-well approach.
The
revised steam injection plan and our 2006 horizontal infill drilling
program
required us to shut-in several high rate horizontal wells, resulting
in
lower
production in the first quarter. However, we are quickly getting back
on track
and our steam floods at Poso Creek and the Ethel D property are currently
at
record production levels. Our companywide production in the first week
of May is
approaching 25,000 BOE/D, as we are seeing strong contributions from
Brundage
Canyon in the Rockies as well as our California assets. We are working
diligently to achieve our production target of 25,800 BOE/D in
2006.
“The
recent results from our diatomite assets in California are also noteworthy.
Production is nearing 300 BOE/D and the project is demonstrating a
measurable
thermal response that is consistent with our petro-technical analysis.
These
results are well aligned with our performance outlook for this area
and we
intend to determine the commercial viability of the project in the
second half
of 2006.”
1
Berry
Petroleum Company News Release - May 9, 2006 Page
2 of
4
Ralph
J.
Goehring, executive vice president and chief financial officer, said,
“Our
discretionary cash flow in the first quarter of 2006 was a record $55.6
million,
an increase of 11% compared to $49.9 million in the fourth quarter
of 2005 (see
Explanation and Reconciliation of Non-GAAP Financial Measures.) Our
earnings for
the quarter were impacted by the $5.2 million charge related to dry
holes
(primarily Coyote Flats, Utah) and by a $4.8 million unrealized non-cash
expense
related to our natural gas derivatives. The purpose of these derivative
instruments is to protect the acquisition economics of our Piceance
Basin
assets. We recently increased our credit facility to accommodate continuing
growth of the Company by raising our borrowing base to $500 million
from $350
million. Our long-term debt increased at the end of the first quarter
to $249
million primarily as a result of our Piceance Basin acquisition. Our
debt-to-enterprise value now stands at approximately 13%, which continues
to be
less than most domestic E&P companies that have a market capitalization of
less than $5 billion. We are very active in all asset areas of the
Company and
expect improving results in this commodity market as we execute our
capital
budget and growth strategies.”
First
Quarter Production Summary
|
Average
Daily Production
|
||||||||
|
Three
Months Ended
|
||||||||
|
Oil
and Gas
|
03/31/06
|
%
|
12/31/05
|
%
|
03/31/05
|
%
|
||
|
Heavy
Oil Production (Bbl/D)
|
15,407
|
66
|
15,997
|
68
|
15,813
|
72
|
||
|
Light
Oil Production (Bbl/D)
|
3,303
|
14
|
3,438
|
15
|
3,343
|
15
|
||
|
Total
Oil Production (Bbl/D)
|
18,710
|
80
|
19,435
|
83
|
19,156
|
87
|
||
|
Natural
Gas Production (Mcf/D)
|
28,507
|
20
|
25,428
|
17
|
17,347
|
13
|
||
|
Total
(BOE/D)
|
23,461
|
100
|
23,673
|
100
|
22,047
|
100
|
||
Explanation
and Reconciliation of Non-GAAP Financial Measures:
Discretionary
cash flow is net cash provided by operating activities before the net
increase
or decrease in current assets and current liabilities. This number
is presented
because of its acceptance as an indicator of an oil and gas exploration
and
production company's ability to internally fund development, exploration
and
exploitation activities and to service or incur additional debt. This
measure
should not be considered as an alternative to net cash provided by
operating
activities as defined by generally accepted accounting principles.
A
reconciliation of discretionary cash flow to net cash provided by operating
activities is shown below for the three months ended March 31, 2005
and 2006 and
December 31, 2005 (in millions) as follows:
|
|
Three
Months Ended
|
|||||||||
|
|
03/31/06
|
12/31/05
|
03/31/05
|
|||||||
|
Net
cash provided by operating activities
|
$
|
25.3
|
$
|
65.5
|
$
|
19.3
|
||||
|
Add
back: Net increase (decrease) in current assets and current
liabilities
|
30.3
|
(15.6
|
)
|
17.8
|
||||||
|
Discretionary
cash flow
|
$
|
55.6
|
$
|
49.9
|
$
|
37.1
|
||||
Teleconference
Call
A
conference call will be held Tuesday, May 9, 2006 at 1:30 p.m. Eastern
Time
(10:30 a.m. Pacific Time). Dial 1-866-825-3354 to participate, using
passcode
14675043. International callers may dial 617-213-8063. For a digital
replay
available until May 23, 2006, dial 1-888-286-8010 (passcode 81527857).
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.
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”
Any
statements in this news release that are not historical facts are
forward-looking statements that involve risks and uncertainties. Words
such as
“will,” “may,” “achieve,” “appraisal,” “continue,” “target,” “expect,”
“anticipate,” and forms of those words others indicate forward-looking
statements. Important factors which could affect actual results are
discussed in
PART
1, Item 1A. Risk Factors
of
Berry’s 2005 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 - May 9, 2006 Page
3 of
4
|
CONDENSED
CONSOLIDATED INCOME
STATEMENTS
|
|||||||
|
(In
thousands, except per share data)
|
|||||||
|
(unaudited)
|
|||||||
|
Three
Months
|
|||||||
|
3/31/06
|
3/31/05
|
||||||
|
Revenues
|
|
|
|||||
|
Sales
of oil and gas
|
$
|
101,932
|
$
|
75,391
|
|||
|
Sales
of electricity
|
15,169
|
12,456
|
|||||
|
Interest
and other income, net
|
493
|
148
|
|||||
|
Total
|
117,594
|
87,995
|
|||||
|
Expenses
|
|||||||
|
Operating
costs - oil &
gas
|
25,738
|
20,892
|
|||||
|
Operating
costs - electricity
|
14,332
|
13,358
|
|||||
|
Production
taxes
|
3,233
|
2,515
|
|||||
|
Exploration
costs
|
2,289
|
561
|
|||||
|
Depreciation,
depletion & amortization - oil & gas
|
13,223
|
8,527
|
|||||
|
Depreciation,
depletion & amortization - electricity
|
767
|
772
|
|||||
|
General
and
administrative
|
8,314
|
4,820
|
|||||
|
Interest
|
1,577
|
1,162
|
|||||
|
Commodity
derivative
|
4,828
|
-
|
|||||
|
Dry
hole, abandonment & impairment
|
5,209
|
2,021
|
|||||
|
Total
|
79,510
|
54,628
|
|||||
|
|
|||||||
|
Income
before income
taxes
|
38,084
|
33,367
|
|||||
|
Provision
for income
taxes
|
14,833
|
10,862
|
|||||
|
|
|||||||
|
Net
income
|
$
|
23,251
|
$
|
22,505
|
|||
|
|
|||||||
|
Basic
net income per
share
|
$
|
1.06
|
$
|
1.02
|
|||
|
Diluted
net income per
share
|
$
|
1.03
|
$
|
1.00
|
|||
|
Dividends
per
share
|
$
|
0.13
|
$
|
0.12
|
|||
|
|
|||||||
|
Weighted
average common shares:
|
|||||||
|
Basic
|
21,994
|
21,981
|
|||||
|
Diluted
|
22,502
|
22,470
|
|||||
|
CONDENSED
CONSOLIDATED
BALANCE
SHEETS
|
|||||||
|
(In
thousands)
|
|||||||
|
(unaudited)
|
|||||||
|
3/31/06
|
12/31/05
|
||||||
|
Assets
|
|||||||
|
Current
assets
|
$
|
78,620
|
$
|
74,886
|
|||
|
Properties,
buildings & equipment, net
|
738,627
|
552,984
|
|||||
|
Other
long-term assets
|
7,728
|
7,181
|
|||||
|
$
|
824,975
|
$
|
635,051
|
||||
|
Liabilities
& Shareholders’ Equity
|
|||||||
|
Current
liabilities
|
$
|
118,841
|
$
|
129,643
|
|||
|
Deferred
income taxes
|
52,664
|
55,804
|
|||||
|
Long-term
debt
|
249,000
|
75,000
|
|||||
|
Other
long-term liabilities
|
72,809
|
40,394
|
|||||
|
Shareholders’
equity
|
331,661
|
334,210
|
|||||
|
|
$
|
824,975
|
$
|
635,051
|
|||
3
Berry
Petroleum Company News Release - May 9, 2006 Page
4 of
4
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|||||||
|
(In
thousands)
|
|||||||
|
(unaudited)
|
|||||||
|
|
Three
Months
|
||||||
|
|
3/31/06
|
3/31/05
|
|||||
|
Cash
flows from operating activities:
|
|||||||
|
Net
income
|
$
|
23,251
|
$
|
22,505
|
|||
|
Depreciation,
depletion & amortization (DD&A)
|
13,990
|
9,299
|
|||||
|
Dry
hole, abandonment & impairment
|
4,985
|
(213
|
)
|
||||
|
Commodity
derivatives
|
4,828
|
-
|
|||||
|
Stock-based
compensation expense
|
1,014
|
376
|
|||||
|
Deferred
income taxes, net
|
7,464
|
5,042
|
|||||
|
Other,
net
|
52
|
89
|
|||||
|
Net
increase in current assets and current liabilities
|
(30,267
|
)
|
(17,846
|
)
|
|||
|
Net
cash provided by operating activities
|
25,317
|
19,252
|
|||||
|
Net
cash used in investing activities
|
(206,084
|
)
|
(125,150
|
)
|
|||
|
Net
cash provided by financing activities
|
180,162
|
107,358
|
|||||
|
Net
(decrease) increase in cash and cash equivalents
|
(605
|
)
|
1,460
|
||||
|
Cash
and cash equivalents at beginning of year
|
1,990
|
16,690
|
|||||
|
Cash
and cash equivalents at end of period
|
$
|
1,385
|
$
|
18,150
|
|||
|
COMPARATIVE
OPERATING STATISTICS
|
||||||||||
|
(unaudited)
|
||||||||||
|
Three
Months
|
||||||||||
|
3/31/06
|
3/31/05
|
Change
|
||||||||
|
Oil
and gas:
|
||||||||||
|
Net production-BOE
per day
|
23,461
|
22,047
|
+6
|
%
|
||||||
|
Per
BOE:
|
||||||||||
|
Average
sales price before hedges
|
$
|
50.04
|
$
|
40.89
|
+22
|
%
|
||||
|
Average
sales price after hedges
|
$
|
48.45
|
$
|
37.81
|
+28
|
%
|
||||
|
Operating
costs
|
$
|
12.19
|
$
|
10.53
|
+16
|
%
|
||||
|
Production
taxes
|
1.53
|
1.27
|
+20
|
%
|
||||||
|
Total
operating costs
|
13.72
|
11.80
|
+16
|
%
|
||||||
|
DD&A -
oil and
gas
|
6.26
|
4.30
|
+46
|
%
|
||||||
|
General
& administrative expenses
|
3.94
|
2.43
|
+62
|
%
|
||||||
|
|
||||||||||
|
Interest
expense
|
$
|
.75
|
$
|
.59
|
+27
|
%
|
||||
#
# #