Berry Petroleum Earns $1.52 Per Share in Third Quarter
Berry Petroleum Company (NYSE:BRY) reported net income of $34.2 million, or $1.52 per diluted share, for the third quarter of 2005, up 88% compared to net income of $18.2 million, or $.82 per diluted share, in the third quarter of 2004, according to Robert F. Heinemann, president and chief executive officer. Revenues rose to a record $110 million in the quarter, up 51% from $73 million in the third quarter of 2004. The average daily production of 23,647 barrels of oil equivalent (BOE), which consists of 20,000 barrels of crude oil and 21.8 million cubic feet of natural gas, was a record and an increase of 14% over the 20,825 BOE achieved a year ago. The third quarter 2005 average realized sales price of $44.25 per BOE was up 37% from the $32.28 per BOE received in the third quarter of 2004.
Mr. Heinemann continued, “Berry’s performance in the third quarter was outstanding. Our quarterly earnings were a Company record as was our average daily production, which increased 4% over the second quarter of 2005 and 14% over last year’s third quarter. We are continuing our growth strategy by investing record cash flows into our core producing assets and new exploitation opportunities. Berry raised its capital budget for 2005 by $29 million, or 27%, to $136 million to take advantage of these investment opportunities.
“Additionally, in August the board approved an 8% increase in the quarterly dividend beginning with the September 2005 payment, and issued a one-time special dividend of $.10 per share to allow shareholders to fully participate in the Company’s success.
“Berry is currently appraising several of its new prospects, including the Company’s Lake Canyon shallow oil and deep gas projects and the Coyote Flats Ferron gas and coal bed methane projects in the Uinta Basin of Utah. We are launching a five-well development program on our Tri-State Niobrara acreage in Kansas. The 25-well expansion of our California diatomite heavy oil project is well underway. Success on any of these projects could be very significant to the Company. In the fourth quarter, Berry increased its acreage position and now holds an interest in approximately 900,000 gross acres in the Rockies and Mid-Continent. We completed a `bolt-on’ acquisition of a 50% working interest in 60,000 net acres adjacent to and immediately north of our Yuma County Niobrara gas properties in Colorado. We also closed on previously announced acreage in the North Dakota Bakken play. Berry intends to appraise all these opportunities in a decisive and expedient manner. To that end, the Company has purchased two drilling rigs and is working to secure the additional equipment needed to complete the drilling of our inventory over the next several years.”
For the nine months ending September 30, 2005, net income was a record $82.0 million, or $3.65 per diluted share, up 87% from net income of $43.9 million, or $1.97 per diluted share, for the nine months ending September 30, 2004. Revenues were $291 million in the first nine months of 2005, up 50% from $194 million in the first nine months of 2004. For the nine months ending September 30, 2005, average daily production of 22,793 BOE increased by 13%, and the average realized sales price of $40.48 per BOE was up 41% from the first nine months of 2004.
Mr. Heinemann added, “We are accomplishing our diversification strategy as witnessed by our third quarter production volumes, which were 71% heavy oil, 14% light oil and 15% natural gas. Our reserves and production are moving toward a more balanced mix which will result in a portfolio less vulnerable to commodity price swings. It is our goal to continue to diversify our asset base.”
Ralph J. Goehring, executive vice president and chief financial officer, said, “Our financial performance in the third quarter is unparalleled in the Company’s history. The combination of record production and record high oil prices allows Berry to generate outstanding cash flow and returns on our investments. Net cash provided by operating activities was a record $122 million in the first nine months of 2005, up 56% from $78 million in the same period in 2004. In the first nine months of 2005, the Company invested $78 million in capital projects, $119 million in property acquisitions, retired debt of $44 million and paid dividends of $10 million.
“Our 2005 fourth quarter looks like it will be a very strong quarter for Berry. Likewise, 2006 is shaping up to be another record year in production as we target 25,000 BOE/D from existing producing assets, or 9% over our 2005 target of 23,000 BOE/D. We anticipate our 2006 capital program, excluding acquisitions, to be at least $150 million and funded out of cash flow.”
Teleconference Call
A conference call will be held Thursday, November 3, 2005, at 11:00 a.m. Eastern Time (8:00 a.m. Pacific Time). Dial 1-866-713-8567 to participate, using passcode 50903983. International callers may dial 617-597-5326. For a digital replay available until November 17, 2005, dial 1-888-286-8010 (passcode 52056556). 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.
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”, “intend”, “could”, “target”, “goal”, “anticipate”, “looks like” and others indicate forward-looking statements, but their absence does not mean that a statement is not forward looking if the discussion involves strategy, beliefs, plans, targets or intentions. Forward-looking statements are made based on management’s current expectations and beliefs concerning future developments and their potential effects upon Berry Petroleum Company. Important factors which could affect actual results are discussed in Part II of our 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.”
CONDENSED INCOME STATEMENTS (In thousands, except per share data) (unaudited) Three Months Nine Months ——————- ——————- 9/30/05 9/30/04 9/30/05 9/30/04 ——– ——– ——– ——– Revenues Sales of oil and gas $ 96,439 $ 61,560 $252,635 $159,520 Sales of electricity 12,933 11,344 36,903 34,569 Interest and other income, net 612 45 1,130 338 ——– ——– ——– ——– Total 109,984 72,949 290,668 194,427 ——– ——– ——– ——– Expenses Operating costs – oil & gas production 28,144 22,487 77,925 58,721 Operating costs – electricity generation 12,316 10,423 36,596 33,415 Exploration costs 749 – 1,535 – Depreciation, depletion & amortization – oil & gas 8,813 7,500 26,800 21,497 Depreciation, depletion & amortization – electricity 831 823 2,443 2,539 General and administrative 5,965 4,769 15,988 16,956 Dry hole, abandonment & impairment 2,803 – 5,425 – Interest 1,598 512 4,502 1,577 ——– ——– ——– ——– Total 61,219 46,514 171,214 134,705 ——– ——– ——– ——– Income before income taxes 48,765 26,435 119,454 59,722 Provision for income taxes 14,546 8,206 37,470 15,850 ——– ——– ——– ——– Net income $ 34,219 $ 18,229 $ 81,984 $ 43,872 ========= ========= ========= ======== Basic net income per share $ 1.55 $ .83 $ 3.72 $ 2.01 Diluted net income per share $ 1.52 $ .82 $ 3.65 $ 1.97 Cash dividends per share $ .23 $ .18 $ .47 $ .40 Weighted average capital stock outstanding: Basic 22,068 21,934 22,039 21,875 ========= ========= ========= ======== Diluted 22,529 22,365 22,489 22,295 ======== ======== ======== ======== CONDENSED BALANCE SHEETS (In thousands) (unaudited) 9/30/05 12/31/04 ————— ————– Assets Current assets $ 95,468 $ 61,001 Properties, buildings & equipment, net 512,034 338,706 Other assets & deposits 5,750 12,397 ————— ————– $ 613,252 $ 412,104 =============================== Liabilities & Shareholders’ Equity Current liabilities $ 122,072 $ 64,841 Deferred income taxes 48,221 47,963 Long-term debt 100,000 28,000 Other long-term liabilities 50,929 8,214 Shareholders’ equity 292,030 263,086 ————— ————– $ 613,252 $ 412,104 =============== ============== CONDENSED STATEMENTS OF CASH FLOWS (In thousands) (unaudited) Nine Months Ended ——————————– 9/30/05 9/30/04 ————— ————– Cash flows from operating activities: Net income $ 81,984 $ 43,872 Depreciation, depletion & amortization (DD&A) 29,243 24,036 Deferred income taxes 16,939 6,846 Stock-based compensation expense 404 4,520 Other, net 2,404 205 Net changes in operating assets and liabilities (8,687) (997) Net cash provided by operating activities 122,287 78,482 Net cash used in investing activities (196,891) (55,172) Net cash provided by (used in) financing activities 66,341 (25,760) ————— ————– Net (decrease) increase in cash and cash equivalents (8,263) (2,450) Cash and cash equivalents at beginning of year 16,690 10,658 ————— ————– Cash and cash equivalents at end of period $ 8,427 $ 8,208 =============== ============== COMPARATIVE OPERATING STATISTICS (unaudited) Three Months Ended Nine Months Ended ———————— ———————— 9/30/05 9/30/04 Change 9/30/05 9/30/04 Change ——– ——– —— ——– ——– —— Oil and gas: Net production-BOE per day 23,647 20,825 +14% 22,793 20,243 +13% Per BOE: Average sales price before hedging $51.34 $35.61 +44% $45.38 $31.58 +44% Average sales price after hedging 44.25 32.28 +37% 40.48 28.81 +40% Operating costs 12.94 11.74 +10% 12.52 10.59 +18% DD & A 4.05 3.91 +4% 4.31 3.88 +11% General & administrative expenses 2.74 2.49 +10% 2.57 3.06 -16% Interest expense $.73 $.27 +170% $.72 $.28 +157%