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): July 25, 2008
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))
- 1
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Item
2.02 Results of Operations and Financial Condition
On July
25, 2008, Berry Petroleum Company issued a news release announcing its financial
and operational results for the second quarter ended June 30, 2008.
These results are discussed in the news release attached hereto as Exhibit 99.1,
which is incorporated by reference in its entirety.
Item 9.01
Financial
Statements and Exhibits
(d)
Exhibits
99.1 -
News Release by Berry Petroleum Company dated July 25, 2008, titled "Berry
Petroleum Earns $1.08 Per Share in Second Quarter 2008" announcing the
Registrant's results for the second quarter ended June 30, 2008.
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: July
25, 2008
- 2
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Berry Petroleum Company News
Contact:
Berry Petroleum Company
1999 Broadway, Suite
3700
Denver, CO
80202
303-999-4400
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Contacts:
Shawn Canaday 303-999-4000 Todd Crabtree
866-472-8279
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Berry
Petroleum Earns $1.08 Per Share in Second Quarter 2008; Averages Record
29,000 BOE/D Production and Generates Discretionary Cash Flow of $108 Million
Achieves
Second Quarter Production Exit Rate of 30,000 BOE/D
Denver -- (BUSINESS WIRE) – July 25,
2008 -- Berry
Petroleum Company (NYSE:BRY) earned net
income of $49 million, or $1.08 per diluted share, for the three months ended
June 30, 2008, up 128% from net income of $21.4 million, or $.48 per diluted
share excluding the net gain on sale of assets of $30.6 million in the second
quarter of 2007, according to Robert F. Heinemann, president and chief executive
officer. Discretionary cash flow totaled a record $108 million in the
quarter, up 82% from $59.4 million in the second quarter of 2007. (Discretionary
cash flow is a non-GAAP measure; see reconciliation below.)
For the
second quarter ended June 30, 2008 net production averaged a record 29,000
barrels of oil equivalent per day (BOE/D), an increase of 7% from the 27,195
BOE/D achieved in the same 2007 period. The average realized sales price, net of
hedging, for the 2008 second quarter was $69.77 per BOE, up 54% over the $45.43
per BOE received in the 2007 period. Oil and gas revenues rose 63% to
$185 million in 2008 compared to $113 million in 2007. The Company drilled 120
gross (112 net) wells in the second quarter of 2008.
For 2008
and 2007, net production in BOE per day was as follows:
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Second
Quarter Ended June 30
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2008 Production
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2007 Production
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Oil
(Bbls)
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20,611 | 71 | % | 20,163 | 74 | % | ||||||||||
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Natural
Gas (BOE)
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8,389 | 29 | % | 7,032 | 26 | % | ||||||||||
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Total
BOE per day
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29,000 | 100 | % | 27,195 | 100 | % | ||||||||||
Mr.
Heinemann said, “Execution of our development plans to reach a mid-year
production goal of 30,000 BOE/D has been a focus for each of our asset teams
this year and I am pleased to announce that through growth in both our oil and
gas assets we reached this production milestone and exited the second quarter of
2008 at 30,000 BOE/D from our base assets.
“Our
oil development projects in California continue to deliver exceptional results.
Diatomite production is up 24% over first quarter 2008 levels to approximately
1,700 BOE/D. We continue to bring on new wells, expand infrastructure and
appraise the productive limits of the field. We expect to exit 2008
in the diatomite with production of 3,000 BOE/D. Production from Poso Creek is
up 19% from the first quarter of 2008 to 3,200 BOE/D. Our infill horizontal
program, along with our development at Ethel D, has been successful in keeping
our South Midway production decline in the 5% range as expected.
“Our
natural gas assets also performed well with Piceance production in June up 24%
over the first quarter of 2008, with average daily production of 20.8
MMcf/D. We completed 12 wells in the Piceance during the quarter and
we expect to bring an additional 19 wells on production during the third
quarter. Production in the DJ basin was steady at 19.6 MMcf/D and we also
completed the interpretation of an additional 75 square miles of recently
acquired seismic data in the DJ and expect to replenish our low-risk drilling
inventory.
1
Six Months
Results
Net
income for the first six months of 2008 was $92.2 million or $2.03 per diluted
share, up 30% from $70.8 million or $1.58 per diluted share in the comparable
2007 period. Excluding an asset sale and impairment of an asset held for sale
for a combined net after-tax gain of $28.8 million, net income for the six
months ended June 30, 2007 was $42.0 million or $.94 per diluted
share.
Revenues
for the six months of 2008 were $400.8 million, up 35% from $296.7 million
(including a $50.4 million gain on sale of assets) in the same 2007 period.
Discretionary cash flow totaled $210 million for the first six months of 2008,
up from $108 million in the comparable 2007 period.
For the
six months ended June 30, 2008, net production averaged 28,530 BOE/D, an
increase of 8% from the 26,330 BOE/D achieved in the same period in 2007. The
average realized sales price per BOE, net of hedging, for the six months ended
June 30, 2008 was $67.23 per BOE, up 50% from the $44.72 per BOE received in the
2007 period.
East Texas Acquisition
Closed
On July
15, 2008 Berry closed on the previously announced East Texas natural gas asset
acquisition for a price of $653 million, including closing adjustments that
reflect revenue and capital from the February 1, 2008 effective date. Proved
reserves are estimated to be 335 billion cubic feet equivalent with an all-in
finding and development cost of $2.77/Mcfe. The acquisition adds approximately
32 MMcfe/D to Berry’s production from 100 producing wells.
Development
plans include over 100 drilling locations targeting stacked pays in various
productive zones including the Pettit, Travis Peak, Cotton Valley, and Bossier
sands, and the Bossier and Haynesville shales. We increased our 2008
capital budget by $75 million to a total of $370 million to fund the development
of this asset. We have also conducted three 30-day vertical
Haynesville tests which averaged 1.2 MMcf/D per well and are encouraged by the
potential for the horizontal development of this resource and the realization of
the upside potential of this acquisition.
With the
contribution of these assets, Berry’s production today tops 35,000 BOE/D and we
expect to deliver a 20% to 25% increase in production over 2007 and a 40% to 45%
increase in net proved reserves in 2008 at a finding and development cost
between $10 and $13 per BOE. Berry expects to end the year with
between 235 million and 250 million BOE of proved reserves and average
production for the year of between 32,500 and 33,500 BOE/D. For the
third quarter of 2008 Berry expects to average approximately 35,000
BOE/D and to achieve a December 2008 exit rate between 39,000 and 40,000
BOE/D.”
Financial
Performance
Shawn M.
Canaday, vice president, controller and interim chief financial officer, stated,
“Our financial performance during the quarter was strong with a record $108
million in discretionary cash flow. At $100/Bbl West Texas
Intermediate pricing, we would expect to generate approximately $450 million in
cash flow for the year which should fully fund our $370 million capital program
and allow us to accelerate our high return oil projects and repay
debt.
In
conjunction with our East Texas acquisition we entered into a new five year $1
billion secured credit facility and a short-term $100 million line of credit
which should provide us with the liquidity to execute our 2008 development
plans. Our operating costs increased $13.6 million during the second quarter
when compared to the first quarter. Approximately $10 million of this
change is due to our increased volume of conventional steam generation at Poso
Creek and the diatomite coupled with a $2/MMBtu increase in the price of
California natural gas during the quarter.”
(more)
2
Explanation
and Reconciliation of Non-GAAP Financial Measures
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Three
Months Ended
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Six
Months Ended
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06/30/08
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06/30/07
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06/30/08
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06/30/07
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Net
cash provided by operating activities
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$ 106.6
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$ 81.1
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$
193.8
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$ 88.0
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Add
back: Net increase (decrease) in current assets
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29.2
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(8.2)
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29.3
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5.1
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Add
back: Net decrease (increase) in current liabilities
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(27.3)
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(13.5)
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(13.0)
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14.6
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Discretionary
cash flow
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$ 108.5
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$ 59.4
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$210.1
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$107.7
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Teleconference
Call
An
earnings conference call will be held Friday, July 25, 2008 at 10:30 a.m.
Eastern Time (7:30 a.m. Pacific Time). Dial 1-866-356-4123 to
participate, using passcode 39819015. International callers may dial
617-597-5393. For a digital replay available until August 8, 2008
dial 1-888-286-8010 (passcode 28441625). Listen live or via replay on the web at
http://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 operations in California, Utah, Colorado and
Texas.
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
"plans,” "will," "expect," “target,” “goal,” and forms of those words and others
indicate forward-looking statements. Important factors which could affect actual
results are discussed in PART 1, Item 1A. Risk Factors of Berry's 2007 Form 10-K
filed with the Securities and Exchange Commission on February 26, 2008 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 and all material changes are updated in Part
II, Item 1A within our Form 10-Qs filed subsequent to that date."
(more)
3
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CONDENSED
STATEMENTS OF INCOME
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(In
thousands)
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(unaudited)
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Three Months
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Six Months
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06/30/08
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06/30/07
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06/30/08
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06/30/07
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Revenues
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Sales
of oil and gas
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$ | 185,332 | $ | 113,426 | $ | 349,827 | $ | 215,200 | ||||||||
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Sales
of electricity
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16,979 | 13,867 | 32,906 | 28,463 | ||||||||||||
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Gas
marketing
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11,531 | - | 14,762 | - | ||||||||||||
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Gain
on sale of assets
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- | 50,400 | 414 | 50,398 | ||||||||||||
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Interest and other, net
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1,564 | 1,536 | 2,893 | 2,647 | ||||||||||||
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Total
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215,406 | 179,229 | 400,802 | 296,708 | ||||||||||||
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Expenses
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Operating
costs – oil &
gas
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55,185 | 35,725 | 96,814 | 69,335 | ||||||||||||
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Operating
costs – electricity
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15,515 | 11,083 | 31,914 | 25,254 | ||||||||||||
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Production
taxes
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7,481 | 4,139 | 13,448 | 7,954 | ||||||||||||
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Depreciation,
depletion & amortization - oil & gas
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29,073 | 23,397 | 56,148 | 42,122 | ||||||||||||
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Depreciation,
depletion & amortization - electricity
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652 | 961 | 1,345 | 1,723 | ||||||||||||
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Gas
marketing
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11,071 | - | 14,053 | - | ||||||||||||
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General
and
administrative
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11,160 | 9,651 | 22,543 | 19,958 | ||||||||||||
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Interest
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3,951 | 4,976 | 7,689 | 9,267 | ||||||||||||
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Commodity
derivatives
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59 | - | 767 | - | ||||||||||||
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Dry
hole, abandonment, impairment & exploration
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3,464 | 3,519 | 7,590 | 4,168 | ||||||||||||
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Total
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137,611 | 93,451 | 252,311 | 179,781 | ||||||||||||
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Income
before income
taxes
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77,795 | 85,778 | 148,491 | 116,927 | ||||||||||||
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Provision
for income
taxes
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28,654 | 33,821 | 56,319 | 46,115 | ||||||||||||
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Net
income
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$ | 49,141 | $ | 51,957 | $ | 92,172 | $ | 70,812 | ||||||||
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Basic
net income per
share
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$ | 1.10 | $ | 1.18 | $ | 2.07 | $ | 1.61 | ||||||||
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Diluted
net income per
share
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$ | 1.08 | $ | 1.16 | $ | 2.03 | $ | 1.58 | ||||||||
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Cash
dividends per
share
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$ | 0.075 | $ | 0.075 | $ | 0.15 | $ | 0.15 | ||||||||
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Weighted
average common shares:
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Basic
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44,478 | 44,029 | 44,435 | 43,973 | ||||||||||||
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Diluted
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45,608 | 44,895 | 45,483 | 44,754 | ||||||||||||
(more)
4
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CONDENSED
BALANCE SHEETS
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(In
thousands)
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(unaudited)
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06/30/08
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12/31/07
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Assets
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Current
assets
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$ | 270,871 | $ | 161,019 | ||||
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Property,
buildings & equipment, net
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1,405,560 | 1,275,091 | ||||||
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Other
assets
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73,885 | 15,996 | ||||||
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Liabilities
& Shareholders’ Equity
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Current
liabilities
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$ | 495,994 | $ | 271,369 | ||||
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Deferred
taxes
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87,858 | 128,824 | ||||||
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Long-term
debt
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511,000 | 445,000 | ||||||
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Other
long-term liabilities
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367,469 | 146,939 | ||||||
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Shareholders’
equity
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287,995 | 459,974 | ||||||
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$ | 1,750,316 | $ | 1,452,106 | ||||
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CONDENSED
STATEMENTS OF CASH FLOWS
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(In
thousands)
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(unaudited)
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Six
Months
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06/30/08
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06/30/07
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Cash
flows from operating activities:
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Net
income
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$ | 92,172 | $ | 70,812 | ||||
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Depreciation,
depletion & amortization (DD&A)
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57,493 | 43,845 | ||||||
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Dry
hole & impairment
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5,332 | 3,547 | ||||||
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Commodity
derivatives
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(257 | ) | 675 | |||||
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Stock
based compensation
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4,412 | 3,779 | ||||||
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Deferred
income taxes
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39,030 | 39,695 | ||||||
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Gain
on sale of asset
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(414 | ) | (50,398 | ) | ||||
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Other,
net
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12,388 | (4,270 | ) | |||||
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Net
changes in operating assets and liabilities
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(16,342 | ) | (19,701 | ) | ||||
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Net
cash provided by operating activities
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193,814 | 87,984 | ||||||
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Net
cash used in investing activities
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(237,617 | ) | (153,717 | ) | ||||
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Net
cash provided by financing activities
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49,070 | 65,632 | ||||||
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Net
increase (decrease) in cash and cash equivalents
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5,267 | (101 | ) | |||||
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Cash
and cash equivalents at beginning of year
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316 | 416 | ||||||
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Cash
and cash equivalents at end of period
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$ | 5,583 | $ | 315 | ||||
(more)
5
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COMPARATIVE
OPERATING STATISTICS
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(unaudited)
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Three
Months
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Six
Months
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06/30/08
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06/30/07
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Change
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06/30/08
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06/30/07
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Change
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Oil
and gas:
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Net production-BOE
per day
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29,000 | 27,195 | +7 | % | 28,534 | 26,332 | +8 | % | ||||||||||||||||
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Per
BOE:
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Average
sales price before hedges
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$ | 91.89 | $ | 44.72 | +105 | % | $ | 84.02 | $ | 44.25 | +90 | % | ||||||||||||
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Average
sales price after hedges
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69.77 | 45.43 | +54 | % | 67.23 | 44.72 | +50 | % | ||||||||||||||||
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Operating
costs - oil and gas
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20.91 | 14.44 | +45 | % | 18.64 | 14.55 | +28 | % | ||||||||||||||||
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Production
taxes
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2.83 | 1.67 | +69 | % | 2.59 | 1.67 | +55 | % | ||||||||||||||||
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Total
operating costs
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23.84 | 16.11 | + 47 | % | 21.23 | 16.22 | + 31 | % | ||||||||||||||||
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DD&A -
oil and
gas
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11.02 | 9.45 | +17 | % | 10.81 | 8.84 | +22 | % | ||||||||||||||||
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General
& administrative expenses
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4.23 | 3.90 | +8 | % | 4.34 | 4.19 | +4 | % | ||||||||||||||||
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Interest
expense
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$ | 1.50 | $ | 2.01 | -25 | % | $ | 1.48 | $ | 1.94 | -24 | % | ||||||||||||
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