Berry Petroleum Reports 2012 Results
Berry Petroleum Reports 2012 Results
DENVER--(BUSINESS WIRE)-- Berry Petroleum Company (NYS: BRY) reported net earnings of $172 million, or $3.09 per diluted share, for 2012. After considering certain items, adjusted net earnings were $168 million, or $3.02 per diluted share. Oil and gas revenues were $937 million and discretionary cash flow for the year totaled $502 million, with net cash provided by operating activities of $501 million.
Berry's 2012 production averaged 36,402 BOE/D, and fourth quarter production averaged 39,500 BOE/D. The Company's oil production averaged 27,393 BOE/D in 2012, up 11% from 2011. Berry's oil mix increased from 70% of production in 2011 to 75% of production in 2012. The continued shift toward oil growth, combined with sales of the Company's California heavy oil at a $9 average premium to WTI, raised corporate operating margins from $45 per BOE in 2011 to $49 per BOE in 2012.
For 2012 and 2011, Berry's average net production in BOE per day was as follows:
|2012 Production||2011 Production|
|Natural gas (BOE/D)||9,009||25||%||10,916||30||%|
Total Proved Reserves of 275 MMBOE; 38 MMBOE of oil additions
Proved oil and gas reserves were estimated at 275 million BOE at December 31, 2012. The company added a total of 38 million BOE of proved reserves at its oil properties in 2012 and removed 24 million BOE of reserves at its gas properties. Proved oil reserves were up 10% to 204 million barrels with oil reserves increasing to 74% of total reserves, compared to 68% of total reserves in 2011. Proved developed reserves increased to 55% of total reserves from 53% in 2011. Reserve growth in 2012 was driven by activity in Berry's three oil basins, which comprise 82.5% of proved reserves, with 46% in California, 23% in the Permian basin and 13% in the Uinta. The Company's natural gas reserves declined 24 million BOE in 2012, or 33% from 2011 levels, due to low natural gas prices and the SEC's 5-year rule.
|Fourth Quarter 2012||Third Quarter 2012|
|Natural gas (BOE/D)||8,851||22||%||8,793||24||%|
Fourth Quarter 2012: Production of 39,500 BOE/D, Adjusted Earnings of $0.69 Per Share, and Discretionary Cash Flow of $126 million
For the fourth quarter of 2012, the Company reported net earnings of $38 million, or $0.69 per diluted share. After considering certain items, adjusted net earnings were $38 million, or $0.69 per diluted share. Oil and natural gas sales were $249 million during the quarter. Discretionary cash flow for the quarter totaled $126 million, and net cash provided by operating activities totaled $110 million. Operating margin was approximately $47 per BOE, supported by sales of our California oil at a $10 average premium to WTI.
Production in the fourth quarter of 2012 was 39,500 BOE/D, up 9% from the third quarter of 2012. The Company's oil production in the fourth quarter was 30,649 BOE/D, up 11% from the third quarter of 2012.
In the fourth quarter, production from the Company's Uinta properties averaged 7,500 BOE/D, 26% higher than the third quarter. The commingled Green River / Wasatch vertical wells continued targeting higher oil potential areas and saw improving results, especially from some locations in the acreage acquired during the third quarter of 2012.
Fourth quarter Permian production averaged 7,965 BOE/D, approximately 16% higher than the third quarter. The Company drilled a number of strong wells in northeastern Ector County, and also saw temporary production increase from operational improvements made in the field.
In the fourth quarter, production from the Diatomite asset averaged 3,855 BOE/D, up 10% from the third quarter of 2012. Fourth quarter production from the New Steam Floods projects averaged 2,130 BOE/D, up 11% from the third quarter. The legacy South Midway properties produced an average of 13,070 BOE/D in the fourth quarter, up 3% from third quarter levels, as positive steam flood response translated to increased production.
In the fourth quarter, the Company's natural gas assets in the Piceance and East Texas declined 7% sequentially with no capital investment.
Berry will not host the conference call previously announced for Thursday, February 28, 2013 at 10:00 a.m. MST (12:00 p.m. EST). However, Berry expects to file its Annual Report on Form 10-K with the Securities and Exchange Commission within the week.
|Total proved reserves:|
|Beginning of year||185,880||534,279||274,926|
|Revision of previous estimates||12,145||(205,845||)||(22,162||)|
|Extensions and discoveries||8,459||100,129||25,148|
|Purchase of reserves in place||8,304||16,740||11,094|
|End of year||204,208||425,519||275,129|
|Proved developed reserves||118,937||187,668||150,216|
|Proved undeveloped reserves||85,271||237,851||124,913|
|Total proved reserves||204,208||425,519||275,129|
Reserve Quantities by Property (MMBOE)
|S. Midway, CA||56.5||50.3||6.2|
|N. Midway—Diatomite, CA||55.3||32.6||22.7|
|N. Midway—New Steam Floods, CA||15.4||6.9||8.5|
Non-GAAP Financial Measures
This press release includes discussion of "discretionary cash flow," "adjusted net earnings," "operating margin per BOE," and "Pre-tax PV10," each of which are "non-GAAP financial measures" as defined in Regulation G of the Securities Exchange Act of 1934, as amended. Discretionary cash flow consists of cash provided by operating activities before changes in working capital items. The Company uses discretionary cash flow as a measure of liquidity and believes it provides useful information to investors because it assesses cash flow from operations for each period before changes in working capital, which fluctuates due to the timing of collections of receivables and the settlements of liabilities. Adjusted net earnings consists of net earnings before non-cash derivatives gains (losses), oil and natural gas property impairments and charges related to the extinguishment of debt. The Company believes that adjusted net earnings is useful for evaluating the Company's operational performance from oil and natural gas properties. Operating margin per BOE consists of oil and natural gas revenues less oil and natural gas operating expenses and production taxes divided by the total BOEs produced during the period. The Company uses operating margin per barrel as a measure of profitability and believes it provides useful information to investors because it relates the Company's oil and natural gas revenue and oil and natural gas operating expenses to its total units of production providing a gross margin per unit of production, allowing investors to evaluate how the Company's profitability varies on a per unit basis each period. Pre-tax PV10 is defined as standardized measure before the present value of the Company's future net revenues before income taxes discounted at 10%. The Company believes that pre-tax PV10 is helpful to investors because it is a widely used industry standard and is helpful when comparing the Company's asset base and performance to other comparable oil and natural gas exploration and production companies. These measures should not be considered in isolation or as a substitute for their most directly comparable GAAP measures. Other companies calculate non-GAAP measures differently and, therefore, the non-GAAP measures presented in this release may not be comparable to similarly titled measures used by other companies.
Reconciliation of Non-GAAP Financial Measures
|Discretionary Cash Flow ($ millions)|
|Net cash provided by operating activities||$||109.8||$||501.4|
|Net increase (decrease) in current assets||10.8||13.0|
|Net decrease (increase) in current liabilities including book overdraft||5.6||(32.7||)|
|Cash premiums for repurchases of notes||—||34.7|
|Cash settlements from early termination of natural gas derivatives||—||(14.7||)|
|Discretionary cash flow||$||126.2||$||501.7|
|Adjusted Net Earnings ($ millions)|
|Adjusted net earnings||$||38.2||$||167.7|
|After tax adjustments:|
|Non-cash derivative loss||1.0||22.9|
|Dry hole expense||(8.6||)||(9.3||)|
|Extinguishment of debt and other||0.8||(25.6||)|
|Research and development credit||7.2||7.2|
|Gain on sale of assets||—||1.1|
|Cash settlements from early termination of natural gas derivatives||$||—||$||9.3|
|Net earnings, as reported||$||38.5||$||171.5|
|Operating Margin Per BOE|
|Average sales price including cash derivative settlements||$||72.47||$||72.18|
|Operating cost—oil and natural gas production||23.35||20.43|
About Berry Petroleum Company
Berry Petroleum Company is a publicly traded independent oil and natural gas production and exploitation company with operations in California, Texas, Utah, and Colorado. The Company uses its web site as a channel of distribution of material company information. Financial and other material information regarding the Company is routinely posted on and accessible at http://www.bry.com.
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 "estimate," "expect," "would," "will," "target," "goal," "potential," and forms of those words and others indicate forward-looking statements. These statements include but are not limited to forward-looking statements about the expectations of plans, strategies, objectives and anticipated financial and operating results of the Company, including the Company's drilling program, production, and other guidance included in this press release. These statements are based on certain assumptions made by the Company based on management's experience and perception of historical trends, current conditions, anticipated future developments and other factors believed to be appropriate. Such statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond the control of the Company, which may cause actual results to differ materially from those implied or expressed by the forward-looking statements. Important factors which could affect actual results are discussed in the Company's filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K under the headings "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations."
|CONDENSED STATEMENTS OF OPERATIONS|
|(In thousands, except per share data)|
|Three Months Ended||Twelve Months Ended|
|Oil and natural gas sales||$||248,911||$||232,916||$||937,261||$||870,773|
|Natural gas marketing||2,253||1,939||7,631||13,832|
|Gain on sale of assets||12||170||1,782||—|
|Interest and other income, net||307||286||1,985||1,784|
|Operating costs—oil and natural gas production||84,862||70,778||272,180||237,296|
|Operating costs—electricity generation||5,975||4,727||19,975||25,690|
|Depreciation, depletion & amortization—oil and natural gas production||67,023||58,887||225,892||213,859|
|Depreciation, depletion & amortization—electricity generation||426||461||1,808||1,963|
|Natural gas marketing||1,956||1,753||6,873||13,038|
|General and administrative||18,293||17,767||71,766||61,727|
|Impairment of oil and natural gas properties||—||—||79||625,564|
|Dry hole, abandonment, impairment and exploration||13,486||2,729||20,931||5,482|
|Gain on purchase||—||—||—||(1,046||)|
|Extinguishment of debt||—||—||41,545||15,544|
|Realized and unrealized (gain) loss on derivatives, net||(8,306||)||28,287||(64,620||
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