Berry Corporation Reports Second Quarter 2024 Financial and Operating Results

2024-08-09

TSX - Toronto Stock Exchange · Gold · Canada

Highlights Strong Operational and Financial Performance and Declares Quarterly Dividends

DALLAS, Aug. 09, 2024 (GLOBE NEWSWIRE) -- Berry Corporation (bry) (NASDAQ: BRY) (“Berry” or the “Company”) announced second quarter 2024 results and declared quarterly dividends totaling $0.17 per share. The details for today’s earnings call and webcast are listed below.

Quarterly Highlights & Recent Announcements

Produced 25,300 Boe/d, flat to first quarter; above the midpoint of 2024 annual guidance of 25,200 boe/d Cost reductions on pace, highlighted by 11% sequential quarter decrease in Lease Operating Expenses Declared second quarter dividends of $0.17 per share, including $0.12/share fixed and $0.05/share variable Four horizontal farm-in wells from the Uinta Basin’s prolific Uteland Butte reservoir performing above pre-drill estimates Reported zero recordable incidents and zero lost-time incidents for the third consecutive quarter Reached 60% completion of, and on schedule to meet methane emissions reduction target associated with our existing operations,

“In the second quarter, we delivered strong financial and operational results. Our teams continue to execute reliably and with excellence, and we remain on track to deliver results in line with our full year guidance provided earlier this year. We are focused on creating value by generating sustainable free cash flow with high rates of return in low capital intensity projects, optimizing our cost structure, and maintaining balance sheet strength while meeting high compliance standards,” said Fernando Araujo, Berry’s Chief Executive Officer.

He continued, “The Uinta Basin has seen increased activity and consolidation. Development activity focused on drilling horizontal wells across the basin is moving towards our existing acreage. In April 2024, we purchased a 21% working interest in four, two-to-three mile lateral wells in the Uteland Butte reservoir, which were put on production in the second quarter of 2024. These wells are adjacent to our existing operations and their results will be used to evaluate similar horizontal opportunities on our own acreage. This four-well horizontal program is exceeding pre-drill estimates. With a high working interest in almost 100,000 acres and the majority of acreage held by production in multiple trends, we are strategically positioned to develop our own acreage horizontally at an optimal pace.”

Selected Comparative Results

| | Three Months Ended | | | | | | | | | | | | June 30, 2024 | | March 31, 2024 | | June 30, 2023 | | | | | | | | (unaudited) (in millions, except per share amounts) | | | | | | | | | | | Oil, natural gas & NGL revenues (1) | $ | 169 | | | $ | 166 | | | $ | 158 | | Net (loss) income | $ | (9 | ) | | $ | (40 | ) | | $ | 26 | | Adjusted Net Income (2) | $ | 14 | | | $ | 11 | | | $ | 12 | | Cash flow from operations | $ | 71 | | | $ | 27 | | | $ | 63 | | Adjusted EBITDA (2) | $ | 74 | | | $ | 69 | | | $ | 69 | | (Loss) earnings per diluted share | $ | (0.11 | ) | | $ | (0.53 | ) | | $ | 0.33 | | Adjusted earnings per diluted share (2) | $ | 0.18 | | | $ | 0.14 | | | $ | 0.15 | | Adjusted free cash flow (2) | $ | 19 | | | $ | 1 | | | $ | 34 | | Capital expenditures | $ | 42 | | | $ | 17 | | | $ | 22 | | Production (mboe/d) | | 25.3 | | | | 25.4 | | | | 25.9 |

(1) Revenues do not include hedge settlements. (2) Please see “Non-GAAP Financial Measures and Reconciliations” later in this press release for reconciliation and more information on these Non-GAAP measures.

“We generated Adjusted EBITDA of $74 million in the second quarter, a 7% increase over the first quarter of 2024, with Cash Flow from Operations totaling $71 million and Adjusted Free Cash Flow of $19 million. Compared to the first quarter of 2024, lease operating expenses per boe in the second quarter were down 11% to $23.47 per boe, due primarily to lower energy costs. We continued to drive cost savings throughout the organization and prioritize debt reduction, reducing our revolver balance by nearly 30% to $36 million at the end of the second quarter. This balance was further reduced to $28 million at the end of July even after the final deferred payment from last year’s Macpherson acquisition of $20 million. In the near term, we are also looking opportunistically to refinance our notes, which mature in early 2026,” stated Mike Helm, Berry’s CFO.

Second Quarter 2024 Financial and Operating Results

Q2 2024 Compared to Q1 2024

Oil, natural gas and NGL revenues (excluding hedging settlements) for the second quarter of 2024 increased from the first quarter of 2024, driven by slightly higher oil prices. The net loss for the second quarter of 2024 included a $33 million after-tax impairment of unproved oil and gas properties driven by the implementation of California’s SB 1137 set-back regulations. The improvement of the net loss compared to the first quarter of 2024 included lower lease operating expenses, driven by lower fuel gas volumes purchased, as a result of our cost savings initiatives to reduce steam, as well as a decline in fuel prices. The second quarter of 2024 also included improved hedging results. Adjusted EBITDA and Adjusted Net Income increased in the second quarter of 2024, compared to the prior quarter. Improved working capital for the second quarter drove increased cash flows from operations and Adjusted Free Cash Flow compared to the first quarter of 2024. Capital expenditures were $42 million in the second quarter of 2024 compared to $17 million in the first quarter of 2024, with the increase driven by accelerated development in California and facilities projects, as well as the Utah farm-in development program. At June 30, 2024, the Company had liquidity of $169 million, consisting of $7 million cash and $162 million available for borrowings under its revolving credit facilities.

Q2 2024 Compared to Q2 2023

Compared to the second quarter of the prior year, oil, natural gas and NGL revenues (excluding hedging settlements) increased, which were driven by higher oil prices, offset by lower production in the second quarter of 2024. Adjusted EBITDA for the second quarter of 2024 increased 8% and Adjusted Net Income increased 21% compared to the second quarter of 2023, driven by the increased commodity revenues, a 16% decrease in general and administrative costs and a 1% decrease in lease operating expenses. Cash flow from operations increased in the second quarter of 2024 and Adjusted Free Cash Flow decreased compared to the second quarter of 2023, due to higher capital expenditures in the second quarter of 2024. Capital expenditures for the second quarter of 2024 were $42 million and increased 93% compared to the second quarter of 2023. For the second quarter of 2024, we drilled 19 wells, of which 15 are in California, plus four vertical wells in Utah, with production from our drilling activity in California outperforming expected results.

Quarterly Dividends

The Company’s Board of Directors declared dividends totaling $0.17 per share on the Company’s outstanding common stock, consisting of a fixed dividend of $0.12 per share and variable dividend of $0.05 per share based on the cumulative Adjusted Free Cash Flow results for the six months ended June 30, 2024. Both dividends are payable on August 20, 2024 to shareholders of record at the close of business on August 12, 2024.

Earnings Conference Call

The Company will host a conference call to discuss these results:

If you would like to ask a question on the live call, please preregister at any time using the following link: https://register.vevent.com/register/BI9f9fa21c30284d749f1657af20bc94dc. Once registered, you will receive the dial-in numbers and a unique PIN number. You may then dial-in or have a call back. When you dial in, you will input your PIN and be placed into the call. If you register and forget your PIN or lose your registration confirmation email, you may simply re-register and receive a new PIN.

A web based audio replay will be available shortly after the broadcast and will be archived at https://ir.bry.com/reports-resources or visit https://edge.media-server.com/mmc/p/pq98oify or https://bry.com/category/events

About Berry Corporation (bry)

Berry is a publicly traded (NASDAQ: BRY) western United States independent upstream energy company with a focus on onshore, low geologic risk, low decline, long-lived oil and gas reserves. We operate in two business segments: (i) exploration and production (“E&P”) and (ii) well servicing and abandonment. Our E&P assets are located in California and Utah, are characterized by high oil content and are predominantly located in rural areas with low population. Our California assets are in the San Joaquin basin (100% oil), while our Utah assets are in the Uinta basin (60% oil and 40% gas). We operate our well servicing and abandonment segment in California. More information can be found at the Company’s website at bry.com.

Forward-Looking Statements

The information in this press release includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. You can typically identify forward-looking statements by words such as aim, anticipate, achievable, believe, budget, continue, could, effort, estimate, expect, forecast, goal, guidance, intend, likely, may, might, objective, outlook, plan, potential, predict, project, seek, should, target, will or would and other similar words that reflect the prospective nature of events or outcomes. All statements, other than statements of historical facts, included in this press release that address plans, activities, events, objectives, goals, strategies, or developments that the Company expects, believes or anticipates will or may occur in the future, such as those regarding our financial position; liquidity; our ability to refinance our indebtedness; cash flows (including, but not limited to, Adjusted Free Cash Flow); financial and operating results; capital program and development and production plans; operations and business strategy; potential acquisition and other strategic opportunities; reserves; hedging activities; capital expenditures; return of capital; our shareholder return model and the payment of future dividends; future repurchases of stock or debt; capital investments; our ESG strategy and the initiation of new projects or business in connection therewith, recovery factors; and other guidance are forward-looking statements. Actual results may differ from anticipated results, sometimes materially, and reported results should not be considered an indication of future performance. For any such forward-looking statement that includes a statement of the assumptions or bases underlying such forward-looking statement, we caution that while we believe such assumptions or bases to be reasonable and make them in good faith, assumed facts or bases always vary from actual results, sometimes materially.

Berry cautions you that these forward-looking statements are subject to all of the risks and uncertainties incident to acquisition transactions and the exploration for and development, production, gathering and sale of natural gas, NGLs and oil most of which are difficult to predict and many of which are beyond Berry’s control. These risks include, but are not limited to, commodity price volatility; legislative and regulatory actions that may prevent, delay or otherwise restrict our ability to drill and develop our assets, including with respect to existing and/or new requirements in the regulatory approval and permitting process; legislative and regulatory initiatives in California or our other areas of operation addressing climate change or other environmental concerns; investment in and development of competing or alternative energy sources; drilling, production and other operating risks; effects of competition; uncertainties inherent in estimating natural gas and oil reserves and in projecting future rates of production; our ability to replace our reserves through exploration and development activities or strategic transactions; cash flow and access to capital; the timing and funding of development expenditures; environmental, health and safety risks; effects of hedging arrangements; potential shut-ins of production due to lack of downstream demand or storage capacity; disruptions to, capacity constraints in, or other limitations on the third-party transportation and market takeaway infrastructure (including pipeline systems) that deliver our oil and natural gas and other processing and transportation considerations; the ability to effectively deploy our ESG strategy and risks associated with initiating new projects or business in connection therewith; our ability to successfully integrate the Macpherson assets into our operations; we fail to identify risks or liabilities related to Macpherson, its operations or assets; our inability to achieve anticipated synergies; our ability to successfully execute other strategic bolt-on acquisitions; overall domestic and global political and economic conditions; inflation levels, including increased interest rates and volatility in financial markets and banking; changes in tax laws and the other risks described under the heading “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 and subsequent filings with the SEC.

Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no responsibility to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise except as required by applicable law. Investors are urged to consider carefully the disclosure in our filings with the Securities and Exchange Commission, available from us at via our website or via the Investor Relations contact below, or from the SEC’s website at www.sec.gov.

Tables Following

The financial information and certain other information presented have been rounded to the nearest whole number or the nearest decimal. Therefore, the sum of the numbers in a column may not conform exactly to the total figure given for that column in certain tables. In addition, certain percentages presented here reflect calculations based upon the underlying information prior to rounding and, accordingly, may not conform exactly to the percentages that would be derived if the relevant calculations were based upon the rounded numbers, or may not sum due to rounding.

SUMMARY OF RESULTS

| | Three Months Ended | | | | | | | | | | | | | June 30, 2024 | | March 31, 2024 | | June 30, 2023 | | | | | | | | | (unaudited) ($ and shares in thousands, except per share amounts) | | | | | | | | | | | | Consolidated Statement of Operations Data: | | | | | | | | | | | | | Revenues and other: | | | | | | | | | | | | | Oil, natural gas and natural gas liquids sales | $ | 168,781 | | | $ | 166,318 | | | $ | 157,703 | | | Service revenue | | 31,155 | | | | 31,683 | | | | 47,674 | | | Electricity sales | | 3,691 | | | | 4,243 | | | | 3,078 | | | (Losses) gains on oil and gas sales derivatives | | (5,844 | ) | | | (71,200 | ) | | | 20,871 | | | Other revenues | | 36 | | | | 67 | | | | 36 | | | Total revenues and other | | 197,819 | | | | 131,111 | | | | 229,362 | | | | | | | | | | | | | | | | Expenses and other: | | | | | | | | | | | | | Lease operating expenses | | 53,989 | | | | 60,697 | | | | 54,707 | | | Cost of services | | 25,021 | | | | 27,304 | | | | 37,083 | | | Electricity generation expenses | | 552 | | | | 1,093 | | | | 1,273 | | | Transportation expenses | | 1,039 | | | | 1,059 | | | | 1,096 | | | Acquisition costs | | 1,394 | | | | 2,617 | | | | 972 | | | General and administrative expenses | | 18,881 | | | | 20,234 | | | | 22,488 | | | Depreciation, depletion and amortization | | 42,843 | | | | 42,831 | | | | 39,755 | | | Impairment of oil and gas properties | | 43,980 | | | | — | | | | — | | | Taxes, other than income taxes | | 12,674 | | | | 15,689 | | | | 13,707 | | | Losses on natural gas purchase derivatives | | 2,642 | | | | 4,481 | | | | 14,024 | | | Other operating (income) | | (3,204 | ) | | | (133 | ) | | | (1,033 | ) | | Total expenses and other | | 199,811 | | | | 175,872 | | | | 184,072 | | | | | | | | | | | | | | | | Other expenses: | | | | | | | | | | | | | Interest expense | | (10,050 | ) | | | (9,140 | ) | | | (8,794 | ) | | Other, net | | (53 | ) | | | (83 | ) | | | (110 | ) | | Total other expenses | | (10,103 | ) | | | (9,223 | ) | | | (8,904 | ) | | (Loss) income before income taxes | | (12,095 | ) | | | (53,984 | ) | | | 36,386 | | | Income tax (benefit) expense | | (3,326 | ) | | | (13,900 | ) | | | 10,616 | | | Net (loss) income | $ | (8,769 | ) | | $ | (40,084 | ) | | $ | 25,770 | | | | | | | | | | | | | | | | Net (loss) income per share: | | | | | | | | | | | | | Basic | $ | (0.11 | ) | | $ | (0.53 | ) | | $ | 0.34 | | | Diluted | $ | (0.11 | ) | | $ | (0.53 | ) | | $ | 0.33 | | | | | | | | | | | | | | | | Weighted-average shares of common stock outstanding - basic | | 76,939 | | | | 76,254 | | | | 76,721 | | | Weighted-average shares of common stock outstanding - diluted | | 76,939 | | | | 76,254 | | | | 79,285 | | | | | | | | | | | | | | | | Adjusted Net Income (1) | $ | 14,155 | | | $ | 10,910 | | | $ | 11,666 | | | Weighted-average shares of common stock outstanding - diluted | | 77,161 | | | | 77,373 | | | | 79,285 | | | Diluted earnings per share on Adjusted Net Income (1) | $ | 0.18 | | | $ | 0.14 | | | $ | 0.15 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Three Months Ended | | | | | | | | | | | | | June 30, 2024 | | March 31, 2024 | | June 30, 2023 | | | | | | | | | (unaudited) ($ and shares in thousands, except per share amounts) | | | | | | | | | | | | Adjusted EBITDA (1) | $ | 74,329 | | | $ | 68,534 | | | $ | 69,055 | | | Adjusted Free Cash Flow (1) | $ | 19,333 | | | $ | 1,104 | | | $ | 33,774 | | | Adjusted General and Administrative Expenses (1) | $ | 17,038 | | | $ | 18,943 | | | $ | 19,109 | | | Effective Tax Rate | | 28 | % | | | 26 | % | | | 29 | % | | | | | | | | | | | | | | | Cash Flow Data: | | | | | | | | | | | | | Net cash provided by operating activities | $ | 70,891 | | | $ | 27,273 | | | $ | 62,538 | | | Net cash used in investing activities | $ | (42,486 | ) | | $ | (18,661 | ) | | $ | (27,961 | ) | | Net cash used in financing activities | $ | (25,174 | ) | | $ | (9,990 | ) | | $ | (40,128 | ) |

(1) See further discussion and reconciliation in “Non-GAAP Financial Measures and Reconciliations”.

| | June 30, 2024 | | December 31, 2023 | | | | | (unaudited) ($ and shares in thousands) | | | | | | Balance Sheet Data: | | | | | | | Total current assets | $ | 127,489 | | $ | 140,800 | | Total property, plant and equipment, net | $ | 1,349,593 | | $ | 1,406,612 | | Total current liabilities | $ | 204,545 | | $ | 223,182 | | Long-term debt | $ | 433,656 | | $ | 427,993 | | Total stockholders' equity | $ | 672,960 | | $ | 757,976 | | Outstanding common stock shares as of | | 76,939 | | | 75,667 | | | | | | | |

The following table represents selected financial information for the periods presented regarding the Company's business segments on a stand-alone basis and the consolidation and elimination entries necessary to arrive at the financial information for the Company on a consolidated basis.

| | Three Months Ended June 30, 2024 | | | | | | | | | | | | | | | E&P | | Well Servicing and Abandonment | | Corporate/ Eliminations | | Consolidated Company | | | | | | | | | (unaudited) (in thousands) | | | | | | | | | | | | | | Revenues (1) | $ | 172,508 | | $ | 36,680 | | $ | (5,525 | ) | | $ | 203,663 | | | Net (loss) income before income taxes | $ | 13,860 | | $ | 1,122 | | $ | (27,077 | ) | | $ | (12,095 | ) | | Capital expenditures | $ | 41,735 | | $ | 468 | | $ | 122 | | | $ | 42,325 | | | Total assets | $ | 1,547,334 | | $ | 63,329 | | $ | (77,754 | ) | | $ | 1,532,909 | |